Thank you, Mr. Chair.
I'm Anne Kothawala. I'm the president and CEO of the Convenience Industry Council of Canada, also known as CICC, the chief advocate of Canada's convenience supply chain.
The study that you have undertaken to explore the challenges facing small and medium-sized enterprises is critical as we emerge from the COVID-19 pandemic. While the subject matter of your study directly impacts our stores, I would like to focus my comments on labour shortages, skyrocketing credit card swipe fees as well as regulatory changes that are needed to keep our businesses competitive post-COVID-19.
Convenience stores employ 212,000 Canadians and bring convenience to communities from coast to coast to coast. In many communities, we are the only store providing essentials to consumers, and while we were able to keep our doors open during COVID-19, we haven't been immune to the impacts of a pandemic.
Reduced foot traffic, coupled with increased overhead costs, has placed tremendous financial strain on our businesses. Right now our industry is facing a perfect storm of challenges—declining sales, labour shortages and changing consumer behaviour—which has forced locations to close across Canada. Concerningly, these closures are happening predominantly in rural and northern communities, the very places where these stores serve a critical role for Canadians looking to access essentials.
Our stores are struggling to find appropriately skilled retail clerks and other employees who constitute the convenience supply chain, including truck drivers for our distributors. The competition for workers has pitted the retail industries against one another.
Further complicating our labour shortage is the decrease in immigration during the pandemic. The convenience industry often offers newcomers to Canada their first work experience. For many new Canadians, convenience stores serve as an introduction to the community, and they serve as a stepping stone to owning and running their own business.
In addition to labour challenges, our stores are grappling with keeping prices competitive for customers at a time of high inflation. Keeping prices modest becomes more difficult as the cost of doing business continues to rise. A practical example of this added cost of business is Canada's high credit card fees, which continue to penalize small and medium-sized businesses.
The use of credit and debit cards has never been higher. Our members already experienced exorbitant interchange fees before COVID-19. Now, the move to touchless payments and increased credit card usage during the pandemic have resulted in even higher costs for our small businesses. After real estate and payroll, interchange fees are the third-highest cost of conducting business.
While other countries, including Australia and the EU, have capped their rates, Canadian small businesses continue to pay exceptionally high fees. Credit card fees range anywhere from 1.5% to 4% per transaction. This is in comparison to the EU and Australia, which have capped rates at 0.3% and 0.5% respectively.
In a recent survey, CICC asked our retailers about their awareness of the 2015 and 2020 voluntary commitments by credit card companies and whether they saw any changes. The response from our membership was unanimous—any costs savings that may have occurred have been eroded by the introduction of new fees introduced by banks and/or processors. Companies are simply just passing costs directly to the merchant through new fees.
Our small and medium-sized businesses really need action on this. It has been long promised but not delivered, and our stores would stand to save tens of thousands of dollars, on average, were fees to be reduced. With the cost of everything on the rise, this is an important action not just for businesses but also for consumers.
Speaking of rising prices, I'd be remiss not to mention the unlevel playing field our small and medium-sized business are on when it comes to the retailing of tobacco products in Canada. The unregulated sale of illegal tobacco continues to undermine the legal retailing of these products, which impacts our stores but also results in lost revenue to government, as taxes go uncollected on these products. Increased investment in enforcement and federal provincial coordination is required.
Last, the federal government can also support small and medium-sized businesses by adopting smart regulations that take into consideration the impacts that will be felt at the retail and store levels. Forthcoming regulations, for example, around energy drinks, as well as legacy commitments around front-of-pack labelling have a direct impact on our retailers. Involving Canada's convenience retailers in the development of these regulations, rather than consulting them after they've been developed, would help provide some predictability for our businesses.
In closing, Canada's small businesses are at a critical juncture. COVID-19 has shown that we need to create an environment that will help small businesses meet the needs of Canadians in a post-COVID environment. When local convenience stores are in peril, it has a ripple effect. It impacts tourism, hurts communities and reduces the number of tax dollars collected.
We're on the corners of Canadian communities. We need the federal government to be in ours.
I'm happy to take your questions. Thank you very much for the opportunity.