Evidence of meeting #68 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was store.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Robert Hersche  Senior Director, Corporate Counsel and Regulatory Affairs, Saskatchewan Telecommunications
Jason Hamilton  Director, Marketing, S-Trip
Harley Finkelstein  Chief Platform Officer, Business Development, Shopify Inc.
François Bouchard  President, The Country Grocer

4:10 p.m.

Chief Platform Officer, Business Development, Shopify Inc.

Harley Finkelstein

Thank you, sir.

What you said is really interesting, because a lot of what's happening right now in the retail space is that people are assuming that if big retailers don't take on the new technology, they will become dinosaurs, they'll become extinct. I disagree.

I think it's an amazing opportunity for traditional retailers to expand. The reason I brought up La Bottega is that this is a company that only sold in a 35 kilometre radius for 50 years and now they're selling across Canada by adding one new layer to their business in a very simple way.

The other thing you'd mentioned in terms of spectrum was whether this precluded certain businesses without access to Internet connectivity from participating in this? Absolutely. Having Internet connectivity is a non-starter: if you don't have that, none of this makes any difference whatsoever.

In my world, most people are connected. I have an 82-year old grandmother whom I love very much, who FaceTimes me every single evening before bed to say goodnight. I only bring it up because this is someone who didn't grow up with the Internet in her hands. She lives in the Laurentians; she doesn't live in a city, but she has access to it.

So I think before we can get at some of the sexy stuff of what technology can do for retailers, it goes without saying that connectivity needs to be something that is of primary concern.

4:10 p.m.

NDP

François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

I spoke about the idea of using funds to help merchants get on the wave of new technology and, if the business generates $3 billion in profit, avoid having that money put into public coffers and end up who knows where.

Might that be good for you?

4:10 p.m.

Chief Platform Officer, Business Development, Shopify Inc.

Harley Finkelstein

I think that's a great idea. The money is one part of it, but the reason I brought up the Irish program—it wasn't very much money, as I mentioned—is that you inspire them and you educate them, Even people who aren't necessarily tech savvy and who aren't reading the New York Times online, are hearing about these cool companies emerging. What the Irish government is doing is saying, let's get a group together and let's educate them and inspire them to do it on their own.

But that being said, even for those who aren't connected, do they know where the closest place to connect to the Internet is located? Is it a local library in their hometown or not? I think we need to get that figured out before anything is possible.

4:10 p.m.

Conservative

The Chair Conservative David Sweet

Mr. Hersche.

4:10 p.m.

Senior Director, Corporate Counsel and Regulatory Affairs, Saskatchewan Telecommunications

Robert Hersche

One of the things that we have to understand with the 700 megahertz spectrum.... By the way, I agree with the previous comments that people have to have access to this kind of technology, and that it has to be used.

One of the problems with the rules right now for companies like SaskTel or Vidéotron, etc., is that the maximum we can buy under the rules is maybe just 5 megahertz. I don't want to get into too many technical things, but a small amount or one small block then has to be shared by everyone as you're doing this. So what happens is that the other 15 megahertz is just sitting there. If you want to talk about online services or you want to talk about higher bandwidth, you have to use larger portions of bandwidth and make sure that all of the rural people can have access to that as they go forward.

4:15 p.m.

NDP

François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Thank you. That is very interesting. I hope it will be noted in our report.

I would like to talk about another major issue and find out if it is also affected. The question is more for Mr. Hamilton.

Currently, about five million Canadians go to the United States every year to take a flight because of tariffs. Canada is one of two countries where these tariffs are the highest in the world. Our airports pay land rents, unlike the Americans who receive subsidies.

In real terms, does this make a difference for the travel agencies in my neighbourhood? Does it have a significant impact on your sales figures?

4:15 p.m.

Director, Marketing, S-Trip

Jason Hamilton

In our business it wouldn't make a big difference because we are a full package provider, but if you were just booking a flight, yes, it certainly makes a difference. We provide packages that include many things. It's a full tour. It can be anywhere from 4 days to an 18-day tour, so the flight is just a portion of that and it doesn't come much into play in the overall package. We're also the only people doing what we do, so competition is low and there's no one else to go to.

4:15 p.m.

NDP

François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

It protects you a bit from this problem and has a little less of an impact on you?

4:15 p.m.

Director, Marketing, S-Trip

4:15 p.m.

Conservative

The Chair Conservative David Sweet

Monsieur Lapointe, you have 30 seconds left.

4:15 p.m.

NDP

François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

I have a question for Mr. Bouchard.

You've managed to find a clientele in the far north, right? You are well established there. It wasn't because you put information online, doesn't mean that, automatically, people who live 5,000 km north of Toronto or Montreal are going to know you exist.

How did you manage to attract that clientele?

4:15 p.m.

President, The Country Grocer

François Bouchard

To be honest, it was all word of mouth.

We started out in Ottawa. Actually, it was the clients there who found us online. They asked us to do specific things, such as help them ship grocery orders. They educated us and showed us how to supply them. Then, we worked with influential people in those communities to meet their needs.

Now, several years later, we send all their grocery orders by plane, or by boat in summer. People have very specific needs. They often buy a freezer, and we fill it with non-perishable items and then send it by boat or plane. That is what takes up space during the transport.

4:15 p.m.

NDP

François Lapointe NDP Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Thank you very much.

4:15 p.m.

President, The Country Grocer

4:15 p.m.

Conservative

The Chair Conservative David Sweet

Thank you, Mr. Lapointe.

Mr. Lake, you have five minutes.

4:15 p.m.

Conservative

Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB

Thank you, Mr. Chair.

I'm curious, but did any of you, as you were setting up your businesses—you sound like you have pretty successful, very innovative businesses—access particular government programs as you did that?

4:15 p.m.

Chief Platform Officer, Business Development, Shopify Inc.

Harley Finkelstein

We take part in the SR and ED program, and that's been really fantastic for us. In fact, one of the reasons it is really important for us to remain a CCPC, Canadian-controlled private corporation, is that we do get access to that. Beyond that, we also get capital gains exemptions. For the first $500,000, the tax rate is much lower. Certainly, some of the government programs were quite important.

That being said, when we went to raise money—we raised about $22 million of equity investment—most of our investors, except for one, were U.S.-based investors. That was simply based on the risk appetite and risk tolerance of most of the Canadian investors.

That's another conversation to have, but yes, we did take part in SR and ED, and we still do today.

4:15 p.m.

President, The Country Grocer

François Bouchard

We did not. We basically built it with whatever funds we had, and built it slowly and gradually. Certainly, we've been asked a few times and we've looked around, but there was certainly nothing that came out with flashing red lights that said, “Please join here, apply here”.

A lot of my colleagues—there are a lot of successful colleagues—like Grocery Gateway and Mollie Stone's Markets, have gone online. Those are all in the same boat and built it as a necessity to grow their business, but certainly, there are a lot of others that are interested and just don't know how to get into it.

4:15 p.m.

Director, Marketing, S-Trip

Jason Hamilton

We have a very young workforce, so in the past we used some employment subsidies. That would be the only government funding we would have used. We haven't used it for a couple of years, but in the beginning we used some of those.

4:20 p.m.

Conservative

Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB

Right. I'm interested, actually, Harley, in something that you said in your opening statement. You talked about this concept of showrooming. You use the example of people going into a Best Buy and trying stuff out, but then going home to purchase it because it's more convenient and can be done at home. That just strikes me as a little odd, in terms of what I do when I go to Best Buy. I'm so excited to get whatever I'm getting there that I just can't wait to buy it and take it home. I can't imagine going and trying it out, then going home, ordering it, and waiting for it.

4:20 p.m.

Chief Platform Officer, Business Development, Shopify Inc.

Harley Finkelstein

I think, first of all, that is vintage specific a little bit. What I mean by that is that some of us are used to actually not walking out of a store with something in our hand; we're used to actually going online and purchasing it. I would also say that if there is a price differential that is in a certain range....

I wasn't trying to say anything about—

4:20 p.m.

A voice

That was classy.

4:20 p.m.

Chief Platform Officer, Business Development, Shopify Inc.

Harley Finkelstein

Yes. Okay. Sorry.

4:20 p.m.

Voices

Oh, oh!

4:20 p.m.

Conservative

The Chair Conservative David Sweet

We all agree.