Edmonton businesses struggling, but not closing at faster-than-normal rate

Lida Lahola and Calli-Ann Rudiger made the difficult decision to close their clothing boutique, Callidas, permanently because of the pandemic.

The province's first set of restrictions hit just a week before the store's spring season and 20th-anniversary bash, leaving the owners with extra stock and an uncertain future.

For a while, they made it work, Zooming with customers and dropping off batches of clothes for them to try on at home, but when the pandemic's end date stretched farther and farther away, the owners realized it would be wiser to walk away from the business.

"I think we make the right choice because given what's happening today, we would have been deeper in debt than we want to be," Lahola said.

Selling exclusively online works for some stores, but Callidas' business model depended on face-to-face customer service. Lahola said staff loved making spur-of-the-moment recommendations and getting to know customers. That doesn't happen as much online.

Not all business closures this year have been driven by the pandemic.

Veggie Garden, a Vietnamese restaurant in McCauley, plans to close at the end of this month, and a spokesperson said it was not because of COVID-19. Shauna Ho, translating for owner Luong Nguyen and her sister, manager Ky Nguyen, said the building owner decided to sell, allowing the women to leave their lease. The restaurant had been struggling for a while, with business neither increasing nor decreasing during the pandemic.

But for businesses like Callidas, the pandemic was a death sentence. Restaurants and bars have also shuttered and some retail stores have moved online and permanently closed their brick-and-mortar shops.

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The good news is that, despite the pandemic and sharp economic downturn, Edmonton is not hemorrhaging businesses at a faster-than-normal rate. Though this could happen in the future, recent indicators suggest most businesses are struggling but surviving.

Fewer licence cancellations, bankruptcies

The City of Edmonton does not track business closures, but it does track business licence cancellations.

Cancellations were higher in April than the same month the year before, butin May, June, August, October and November, cancellations actually decreased compared to last year.

City spokesperson Matt Pretty outlined some limitations of this data in an email. One is that some business owners might let their licences expire when theycomeup for renewal, rather than contacting the city to request cancellations.

"In these cases, there may be a lag between the date the business actually stopped operating and when it is reflected in the city's data as a licence that was cancelled or not renewed," he said.

Business bankruptcy data tell a similar story.

According to insolvency statistics from the Office of the Superintendent of Bankruptcies Canada, business bankruptcies have been trending down this year.

From January to October of this year, there were 103 business bankruptcies a decrease of 22 per cent compared to the same time period in 2019.

Businesses staying afloat

Though struggling, businesses have been staying afloat thanks in part to federal programs like the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy.

"More survived than one might have otherwise expected through this time," said Mike Holden, vice president of policy and chief economist forthe Business Council of Alberta.

But as the pandemic continues, many businesses are accumulating costs, deferring expenses and taking on additional debt.

A day of reckoning and dampened economic growth could be ahead, Holden said, or the economy could continue its slow recovery.

"It's so unclear how that's going to shake out," he said.