Small and medium-sized businesses (SMBs) are at the heart of Canada’s economy, driving employment and contributing significantly to gross domestic product. Over the past few years, these businesses, especially retailers, have faced no shortage of challenges that they’ve had to navigate largely on their own, unlike larger companies with the backing of big national or global corporations. The pandemic brought supply chain disruptions and changing consumer behaviours, while the rapid pace of digital transformation continues to reshape how businesses operate.
Despite these obstacles, many Canadian SMBs have shown resilience and creativity, finding ways to adapt for growth and success. Research by the Retail Council of Canada and Leger, from a survey of approximately 750 Canadian SMBs, shows 88 per cent of SMBs that sell physical goods to end-users now use at least one digital tool, from payment processing systems to social media management platforms. These tools are changing how businesses sell, connect with customers and streamline operations.
While digital transformation opens the door to incredible opportunities, it doesn’t come without its difficulties. SMBs must navigate these hurdles to fully leverage the potential of digital tools and stay competitive in an evolving market.
Adopting Modern Tools
The pandemic fast-tracked digital adoption among Canadian SMBs, with platforms like Shopify, Amazon, Facebook and Instagram leading the charge. During this time, 38 per cent of SMBs reported increased usage of digital tools, which have levelled the playing field by giving even the smallest retailers access to advanced e-commerce capabilities and the chance to compete on a larger scale.
Digital sales channels, such as online stores and marketplaces, now make up 46 per cent of SMB revenue. Looking ahead, 87 per cent of SMBs plan to maintain or increase their use of digital tools — a clear indication of the growing reliance on digital-first strategies to boost customer engagement and improve operations.
Difficulties Along the Digital Pathway
While digital tools offer significant advantages, many SMBs face notable barriers to adoption. Limited resources, cited by 38 per cent of survey respondents, remain a major challenge. Many business owners simply lack the budget to invest in robust digital infrastructure or hire the experts needed to manage these tools effectively.
Additionally, 28 per cent of SMBs report a lack of expertise as an obstacle, particularly when it comes to adopting more advanced tools like app stores or search engine optimization (SEO) platforms.
Another timely challenge for Canadian SMBs is the reliance on one or a few external partners to deliver goods to customers. While digital channels help SMBs reach broader audiences, disruptions with key delivery partners, such as Canada Post, can lead to delays and impact customer satisfaction. This shift to digital also brings other critical areas like logistics and supply chain reliability into sharper focus — areas SMBs need to address to ensure a seamless customer experience.
Turning Challenges into Opportunities
Despite the challenges, there’s reason for optimism. Canadian SMBs are finding innovative ways to overcome obstacles to digital adoption. Affordable and user-friendly tools like Shopify, which powers 41 per cent of SMB web stores, are making e-commerce more accessible. Social media’s click-to-buy features also provide an easy way for businesses to connect with tech-savvy consumers without requiring complex integrations.
Partnerships and third-party services are proving invaluable, too. Fulfillment solutions like in-store pickup and standard shipping enable SMBs to compete with larger retailers by offering convenience and improving customer satisfaction.
Digital transformation is also opening doors to new markets. Platforms like Amazon Marketplace allow SMBs to reach international audiences, bypassing geographical limitations to scale their operations globally. These strategies highlight how digital tools and creative solutions are helping SMBs not just survive but thrive in an increasingly digital economy.
Preparing for What’s to Come
The future for Canadian SMBs lies in embracing digital transformation strategically. There are three practical steps for businesses looking to succeed in this shifting landscape: start small; invest in training and support; and leverage analytics.
Begin with one or two digital tools like setting up a web store or using a social media marketplace. Expand gradually based on performance and your business’s capacity to manage growth.
Close the skills gap by providing staff training or partnering with external experts who can guide your digital journey. Building expertise ensures long-term success.
Utilize tools like Google analytics or Shopify analytics to track consumer behaviour and fine-tune your sales strategies in real-time. Data-driven decisions can make all the difference.
As digital tools continue to evolve, they will bring even more opportunities for SMBs to innovate, grow and engage with customers in meaningful and impactful ways.
Luc Dumont is senior vice-president of consumer insights at Leger, the largest Canadian-owned market research firm in the country, offering expert insights to help brands make informed decisions. Adrian Bachmann is associate vice-president of consumer insights for the company’s Central Canada division.