Future of B.C.’s Small Businesses is Online: Economist

Pierre Cléroux, Vice President, Research and Chief Economist at BDC

Small businesses need to meet consumers online and bank on the ‘Made in Canada’ brand, says BDC chief economist Pierre Cléroux

BCBusiness sat down with Pierre Cléroux, VP of research and chief economist at the Business Development Bank of Canada, to discuss the future of small business on the West coast, micro e-commerce and the power of ‘Made in B.C.’
Which trend in consumer behaviour will have the greatest impact on small businesses in B.C. in the near future?

The Internet: more and more Canadians are making decisions online about the products that they choose and buy. 84 per cent of Canadians are connected to the internet, which is one of the highest rates in the world, but only 20 per cent of small businesses are selling on the web right now, which is a really low number compared to other developed economies. As a result Canadians are buying more from American websites than they do from Canadian websites; we really have to increase our ability to sell on the web because the consumers are going there.

Are small businesses losing out on opportunities in e-commerce to large corporation?

Even big retailers aren’t faring so well in Canada. We’re not doing as well as our American counterparts for example, so we really have to change the way that we are communicating with consumers. All businesses have to meet the consumer on the Internet. Beyond e-commerce, small businesses are very well positioned to bank on the trends of consumers demanding local content and also health awareness. SMEs are well positioned to innovate so they can come up with new products that will respond to new trends.

Why do you think Canadian businesses lag behind our global counterparts online?

The U.S. is a huge market: but there’s no reason why Canadian businesses can’t sell more on the web. We have the technology here, we have the ability to invest but we have to bite the bullet and change the way we think about the Internet, because there is no reason why Canadian retailers should lag behind their counterparts in the U.S., in Germany and in France. For example in the UK they sell twice as much on the web than in Canada so there is no reason why Canadian businesses are not able to do the same.

How can Canadian SMEs exploit opportunities in e-commerce?

Well first you need a website. Fact: 30 per cent of SMEs donʼt even have a website. Second, you need a strategy. For example, you need to manage your online reviews and you build awareness of your products and services on the web. You have to convince people online to go to your store. You can eventually choose to start selling online, but at this point first and foremost you need to convince consumers to go to your store.

Does ‘Made in B.C.ʼ matter?

Yes. When we asked survey participants if they’d made an effort to buy “Made in Canada” or local products in the last year, 45 per cent said they cared that it was made in Canada, 25 per cent said their province and 25 per cent said locally. Canadians are looking to buy local because they believe that it has an impact on the local economy and that it is good for the environment. This is a great opportunity for businesses because we can also promote our local products: a restaurant in Vancouver can push B.C. wine because it aligns with what local consumers are looking for.
Buying local makes a significant impact on the environment by saving the transport and the energy that it takes to bring products to your local market. When you buy an imported product you are creating economic activity somewhere else. A pair of jeans made in China creates jobs in China. A suit made in Vancouver creates jobs in Vancouver.

What impact did the recession have on B.C. consumers and their spending? Are we still feeling it?

First, personal income has not increased a lot since the recession and the situation is similar in British Columbia and in the rest of the country. Second, The debt level in Canada is very high for consumers and the highest rate is in British Columbia. It is probably related to the housing market but never the less the consumer debt level is significant, it is actually the highest in our history. So this is going to have an impact on the next few years. Consumers are not going to spend as much as they did in the last few years.

Which of BDC’s findings surprised you the most?

The degree to which consumers want to buy local: We didnʼt realize it was so important for Canadians to buy local because this is not the typical trend that we see in Canada, but as Canadians care more about social and environmental issues, buying local products is a prime way to enact those values.