From mid-January to mid-February, Statistics Canada conducted the Canadian Survey on Business Conditions. The survey collects information on the expectations of businesses moving forward and the ongoing impact of the pandemic on businesses in Canada.

Over the next three months, over two-fifths of businesses expected their profitability would decrease, close to one-third expected their sales would decrease, over one-tenth expected they would increase the prices they charge and nearly three-quarters expected their number of employees would remain the same. Compared with 2019, close to one-third of businesses saw a decline in revenue of 30% or more in 2020. Businesses are concerned with future survival and expect to face a variety of obstacles in the short term.

Many businesses anticipate decline in profitability in the short-term

41.8% of all businesses and 56.4% of businesses in accommodation and food services expected their profitability would decrease over the next three months. Conversely, 8.3% of businesses expected their profitability would increase, most notably in wholesale (13.3%) and retail (12.8%) trade.

30.6% of businesses expected their sales would decrease over the next three months. 49.2% of the businesses in accommodation and food services expected sales to fall.

14.0% of businesses expected they would raise prices over the next three months, down from 18.1% of businesses last cycle. Businesses in wholesale trade (27.5%), manufacturing (23.3%) and retail trade (21.2%) were the most likely to expect they would raise prices.

70.6% of businesses expected their number of employees to remain the same over the next three months, down from nearly 74.1% of businesses last cycle. Conversely, 11.7% of businesses expected their number of employees would decrease, relatively unchanged from 10.4% the previous cycle.

The vast majority of businesses in accommodation and food services and arts, entertainment and recreation experienced loss in revenue in 2020

The vast majority of businesses in accommodation and food services (86.4%) and arts, entertainment and recreation (78.3%) reported a decline in revenue in 2020 from a year earlier. Furthermore, approximately three-fifths of businesses in accommodation and food services (61.5%) and arts, entertainment and recreation (54.8%) had revenues fall 30% or more year over year. 60.5%) of all businesses reported that revenues were down in 2020 from a year earlier and nearly one-third (31.0%) reported that revenue fell by 30% or more.

Businesses are concerned with their survival over the next year

51.3% of businesses did not know how long they could continue to operate at their current level of revenue and expenditures before considering closure or bankruptcy, while 10.3% of businesses reported they could continue for less than 12 months. 

46.4% of businesses did not know how long they could continue to operate at their current level of revenue and expenditures before considering laying off staff, while over 21.3% reported they could continue for less than 12 months.

12.3% of businesses have plans to expand or restructure their business, or to acquire or invest in other businesses in the next year. Conversely, 3.2% of businesses have plans to transfer or sell their business within the next year and 2.4% have plans to close their business, similarly to last cycle. 

Businesses expect to face a variety of obstacles

31.1% of all businesses expected fluctuations in demand or insufficient demand (29.2%) to be obstacles for their business over the next three months, while 25.5% expected rising cost of inputs, maintaining sufficient cash flow or managing debt (24.2%), and recruiting and retaining skilled employees (24.1%) to be obstacles.

During these uncertain times, businesses are faced with a variety of obstacles and future unknowns. Fluctuations in consumer demand was a common obstacle expected over the next three months among businesses in accommodation and food services (45.5%), retail trade (43.3%), wholesale trade (39.6%), manufacturing (35.2%), construction (31.9%) and arts, entertainment and recreation (30.1%). Apart from fluctuations in consumer demand, key obstacles expected by businesses vary by industry.

46.9% of businesses in wholesale trade, manufacturing (44.2%), construction (42.2%) and retail trade (37.3%) expected supply chain challenges to be an obstacle over the next three months.

A substantial proportion of businesses in accommodation and food services (50.5%), transportation and warehousing (37.2%), mining, quarrying, and oil and gas (36.0%), information and cultural industries (35.0%) and wholesale trade (34.9%) expected insufficient demand would be an obstacle.

Businesses shift to increase online sales capabilities

The onset of the COVID-19 pandemic, combined with temporary store closures and physical distancing measures, prompted many Canadian retailers to open or expand their e-commerce presence, quickly changing the retail landscape. Retail e-commerce rose from 3.5% of total retail sales in 2019 to 5.9% in 2020. In December alone, online sales were up by 69.3% year over year to $4.7 billion.

16.7% of businesses had an online sales platform or had plans to implement one. Businesses in retail trade (39.5%), wholesale trade (30.9%) and finance and insurance (30.9%) were most likely to have an online sales platform or plans to implement one.

10.0% of businesses made half or more of their total sales online in 2020, up from 6.8% in 2019. The largest increase (+9.5%) was in finance and insurance, where the share of businesses with half or more of their total sales online almost doubled from 11.8% in 2019 to 21.3% in 2020.

Source: Statistics Canada