Strike by Canada Post workers could derail crucial holiday season for retailers

First came the railways, then the ports. And now another labour disruption, this time at Canada Post, is creating more uncertainty for retailers just as the crucial holiday shopping season approaches.

 

“It’s been a really tight year, a difficult year for retailers,” said Matt Poirier, vice-president of federal government relations with the Retail Council of Canada. While inflation has slowed, the higher prices that came with it are continuing to hit Canadians’ pocketbooks, meaning that shoppers are not spending as much. The labour disruptions affecting the flow of goods to store shelves, and to customers’ doorsteps, is complicating business further.

 

“It is becoming a perfect storm in many ways,” Mr. Poirier said. “It’s making a challenging market that much harder.”

 

More than 55,000 postal workers walked off the job on Friday, shutting down mail service, including parcel delivery that many retailers rely on to ship orders to their e-commerce customers. The move is likely to affect smaller retailers most, many of which say they cannot afford other options to get their goods shipped to customers for the holiday season.

Parcel delivery is also at the heart of the labour disruption: The Canadian Union of Postal Workers opposes the Crown corporation’s plan to expand package deliveries to Saturdays and Sundays by hiring more part-time workers, rather than paying existing employees overtime for weekend shifts.

 

Canada Post faces competition from delivery services including United Parcel Service Inc., FedEx Corp. and Amazon. For retailers who already use those services, the disruption will be minimal. Those include Roots Corp., which primarily uses FedEx, chief executive officer Meghan Roach told The Globe in an e-mail Friday; and La Maison Simons, which relies on a number of carriers.

 

“This strategy allows us to guarantee the continuity of our delivery services, even in the event of unforeseen situations. Our other carrier partners will step in to maintain Simons’ service,” Yannick Vial, Simons senior vice-president and chief digital development and unified commerce officer, wrote in an e-mail.

 

But plenty of retailers are entirely dependent on Canada Post for their shipping. That’s particularly true for small businesses, the Retail Council’s Mr. Poirier said, because the rates tend to be less expensive.

 

Online shoppers are conditioned to expect free shipping, thanks to the near-ubiquity of big players such as Amazon and Walmart. Retailers generally factor the cost of delivery into the price of their goods, but when costs rise unexpectedly, it is not always possible to pass those on in the form of higher prices – especially at a time when stores have to fight to attract reluctant customers by offering more discounts. That puts the squeeze on profit margins, which will only become tighter for those who decide to absorb additional shipping costs.

 

“Retail margins are very thin to begin with,” Mr. Poirier said.

 

For Kari England, owner of Toad Hall Toys Inc. in Winnipeg, switching delivery options is not feasible. As a small business, she does not ship enough volume, even at the holidays, to enable her to negotiate better rates with other shippers. “It’s not a rate that makes sense, financially,” she said.

 

The silver lining is that her family-owned store still draws visitors. Only 5 per cent of her holiday sales are done online, and when Toad Hall Toys delivers locally, it’s often Ms. England or one of her staff driving the packages around themselves.

 

“My bigger concern is how am I paying my bills,” Ms. England said. She pays her suppliers by writing cheques, which are sent through Canada Post. If the strike drags on, that will be a problem – and not just for Ms. England.

 

It is quite common for small businesses to make payments by cheque, said Corinne Pohlmann, executive vice-president of advocacy at the Canadian Federation of Independent Business (CFIB).

“You’d be surprised how much that still happens,” Ms. Pohlmann said. “So there is concern that a prolonged strike, that could have an impact on the cash flow.”

 

A CFIB survey released this week showed that 79 per cent of small businesses in Canada rely on Canada Post services, with wholesale and manufacturing businesses expected to be especially affected.

 

Online marketplace platforms like Etsy and eBay have been fielding questions about the strike from worried sellers on their online forums. Ebay’s seller team has recommended extending handling times and adding alternative shipping options to seller listings such as UPS and FedEx.

 

Michelle Billson, who owns an online earring shop on Etsy called Wild Growth Creations, said her business depends on Canada Post, which allowed her to send earrings from St. Marys, Ont., to customers anywhere in the country, for $2.20.

 

“A lot of people in small business, we’ve built our business model around what can go in the oversized letter mail – make sure that our product will fit under two centimetres high so we can go on the oversized letter, which allows us to pay about $2 per stamp,” she said. She’s seen estimates in the $20 to $60 range from other carriers, she said.

 

The strike could also create hesitation for shoppers who worry about whether online deliveries will arrive in time.

 

If the disruption does last, “then maybe people will be forced to shop locally,” said Ms. England, “which is not a bad thing.”

 

 

 

This article was first reported by The Globe and Mail