Considering a Capital Investment this year?
By Judi Saliba
The COVID-19 pandemic has wreaked havoc across the world with businesses shuttered, millions of people out of work and costs for employers rising due to the requisite for increased sanitation protocols, the installation of protective barriers and PPE for employees. Across Canada, different cities and provinces have widely disparate re-opening directives throughout all business sectors.
It was welcome news that convenience, gas and grocery stores were deemed to be essential services and, according to a survey conducted by the Convenience Industry Council of Canada at the outset of the pandemic, the majority of consumers believe that the convenience industry has stepped up to support communities and front line workers. The results of the survey, conducted by Abacus Data, revealed that the 2280 respondents, while shopping less frequently due to stay-at-home directives, particularly in the aged 60+ demographic, either strongly agreed (average 21 per cent) or agreed (average 35 per cent) that the sector was doing a good job. This sentiment held across all demographics including regional variations, age, gender, income, and educational levels, reported CICC president and CEO Anne Kothawala.*
The primary reasons that consumers continue to patronize the sector include*:
- Convenient location and hours
- Ease of access to retail locations
- Avoiding longer lines as seen at grocery stores
- Availability of items that can’t be purchased elsewhere, like tobacco, lottery, and vaping products
As well, during the pandemic, legal tobacco sales increased between 20-25 per cent due to restricted access to contraband. This, however, is unlikely to continue as sources of contraband begin to open up.
Since C&G retailers are trusted community retailers and likely to continue to see reduced visit frequency, as well as facing increased costs, retailers should be considering what the keys are to recovery and, ultimately, robust business. Frictionless payment options have been primarily embraced by millennials but now are almost universally expected across most demographics. Contactless pick-up cabinets for pre-order and tap and pay pick up options will also increase in popularity for the benefit of speed of service (excepting age-restricted categories) and the halo effect of reduced contact.
For shoppers who prefer the in-store experience, and as prohibitions are lifted on in-store foodservice, offering the categories that consumers embrace like coffee and slush (FCB) will increase both basket size and profit margins. These C&G category winners provide, on average, profits in the vicinity of 70 per cent, far higher than any other category. As well, both groups are traffic drivers, and, as we ease up in the post-pandemic world, consumers that feel confident that C&G retailers are compliant with sanitation protocols will be more willing to visit retailers to purchase these popular categories.
Considering a capital investment is always a daunting prospect, and never more so than during an uncertain business climate. Banks are expected to tighten lending guidelines due to the tremendous profit losses they have endured during the pandemic, making it more difficult for smaller retailers to access credit. However, the federal and provincial governments, as well as the BDC (Business Development Bank of Canada), are stepping in to offer assistance to small and medium-sized businesses to invest in their companies as we grow into the future. These loans, some of them only requiring partial re-payment, are a boon to small and medium-size retailers. Leasing is another viable alternative to free up capital and offer tax-deductible payments, with the operator getting to enjoy full ownership of their capital investment at the end of the term.
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Judi Saliba has been working and consulting with the leaders in the C&G channel for their foodservice equipment and program requirements since 1995. Passionate about the C&G sector and its growth potential, Judi understands the operational challenges that operators face trying to develop and maintain foodservice programs. She often called upon by industry groups and publications to discuss emerging trends. She can be reached by telephone at 1-800-387-2529,
ext 5585 or by e-mail at: firstname.lastname@example.org
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* Source – CICC