Black Friday, Christmas, Boxing Day and Hanukkah — ‘tis the season of shopping and spreading holiday cheer in Kamloops (Tk’emlúps) and around the country. But with a recession predicted for 2023, Canadians might be picky about where they spend their money, putting Kamloops’ small businesses at risk.
While brick-and-mortar businesses always prefer residents shop for the holidays locally instead of ordering gifts from big box stores or online, Kamloops entrepreneurs — and Canadian economists — say upcoming hurdles make the next two months of shopping even more important than usual.
Not only is Canada approaching a recession, but supply chain issues, labour shortages and ongoing COVID-19 impacts have already weakened local economies.
Calli Duncan is a co-owner of Far & Wide and The Botanical Scene, selling curated products at both locations. She says she sympathizes with Kamloops residents on a budget this year but hopes what little money they set aside for gifts goes towards businesses in the region.
“People have less money and less disposable income to spend right now, and we can’t fault them,” she says. “Unfortunately, when all of your money, or a large portion of your money, is [being spent on] groceries and gas or at these big box [stores], your money is not staying in the community.”
How does a recession work?
A recession happens when economic activity declines over a period of time — for months or even years. In practice, this usually means unemployment goes up, retail sales go down and budgets tighten.
Economists are currently predicting a recession will hit Canada at the start of 2023 and last at least until the summer. This time around, the cooling housing market, inflation and outside factors like the COVID-19 pandemic have been cited as reasons for the economic downturn.
Laura Lamb, a professor of economics at Thompson Rivers University (TRU), says the Canadian economy will continue to weaken into the new year. However, she added the labour market’s health might slow things down.
“The labour market has remained strong, but this too is expected to weaken over coming months,” she says. “The current unemployment rate is 5.2% … in Canada and 4.9% in Kamloops — very healthy and considered by many economists to represent a continued labour shortage. Hopefully, the current healthy labour market will soften the expected recession.”
Why would a recession hurt local businesses?
The same effects a recession has on individuals would impact businesses too, whether small local shops or massive multinational corporations. And when consumers are feeling the financial pinch, they spend less money on retail shopping.
Lamb cautions local businesses to expect hurdles in 2023.
“The Canadian, B.C. and Kamloops economies are all expected to slow down in 2023, particularly during the first couple of quarters (January to July),” she explains. “The fall in consumer spending is the largest risk to local businesses in Kamloops.”
To prepare for the expected recession, Lamb recommends Kamloops small businesses manage their cash flow and “operate lean” to keep expenses in check. She says businesses big and small face similar risks during recessions, but small businesses usually struggle more to make it through periods with low sales.
“Small businesses are more likely to be impacted more than larger corporations during recessions as they often have less cash on hand to weather a period of lower sales revenue.”
What can I do to support local businesses this year?
How can residents support Kamloops’ small businesses, then? Lamb says the simplest solution really is the best one.
“Residents can be encouraged to support local small businesses in tough times,” she says. “For instance, during the pandemic shut down, many Kamloops residents made an effort to support local restaurants, which had a significant effect on their survival rate.”
While Black Friday sales and the convenience of Amazon shopping may be tempting, business owners like Duncan hope Kamloopsians devote some of their gift-giving budgets to the local community this year.
“One thing we do at our stores and something you can work to do too is avoid over-buying,” she says.
“We don’t have a bunch of stock we can clear out at 70 per cent off, and we don’t run these huge Black Friday sales because we haven’t over-purchased items throughout the year. We’ve brought things in with intention. Those kinds of sales don’t fit within the ethos of our store.”
Business partner Brianne McDaniel echoes Duncan’s statement, adding the philosophy trickles down to their employees.
“We’ve never trained our employees to push people to buy things they don’t need,” she says. “Yes, we teach our staff to say the right things and educate our customers on the products we sell, but we don’t ask our employees to meet quotas or offer a commission for extra sales.”
Duncan hopes Kamloops residents will think about the ripple effect shopping local has when they buy holiday gifts for loved ones this year.
“If you want to fight inflation and help to make your community better, increase tourism to your community, have a vibrant culture and fun things to do, that all comes from shopping and supporting local … all of this comes from choosing how and where best to spend your money.”
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