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Megan Szanik says business at her Calgary fashion boutique Espy Experience is better than last year.Todd Korol/The Globe and Mail

Megan Szanik, proprietor of the fashion boutiques Espy Experience in Calgary and Canadian Fashion Xperience in Banff, is noticing a marked shift this holiday season.

Last year, amid the prolonged slowdown in the energy sector, companies went without Christmas parties, and recession-weary Calgary consumers barely touched Espy's party dresses. This year, people are back buying those dresses. It's a small but sure sign the economy is picking up, Ms. Szanik says.

"There seems to be a loosening up of purse strings. There's just a general air of 'we're doing better.'"

Todd Hirsch, chief economist at ATB Financial, says, as Christmas nears, people are "cautiously but steadily" spending money on Christmas gifts, entertaining, and going out.

"We're even starting to see some of the business spending on Christmas lunches and parties increase a little bit," Mr. Hirsch says.

While small-business owners like Ms. Szanik are excited to see consumer confidence return after two years of recession, Calgary retailers' and restaurateurs' optimism for increased sales this holiday season is being tempered by the increasing costs they face in running their businesses.

"You think you're getting ahead of it and you've reduced your expenses and you've cut where you can, then something else increases," Ms. Szanik says. "It's been really tough."

Adam Legge, president and CEO of the Calgary Chamber of Commerce, says additional costs continue to come from several directions. Some business owners have faced property tax increases, and Alberta's minimum wage rose to $13.60 from $12.20 on Oct. 1, 2017, and will continue rising until it hits $15 next October. Employers will also have to contend with new provincial employment standards affecting holiday pay and overtime that kick in Jan. 1, 2018.

"I think people are feeling that the worst of the recession is behind us, but I don't think anyone necessarily feels like the economy has roared back to life," Mr. Legge says.

Cam Dobranski, chef and owner of Calgary restaurants Container Bar, Winebar Kensington, and Brasserie Kensington, says the recovery has not yet translated into increased sales.

"It's still a tough go," he says. "Costs keep going up, but there's really no new business right now."

Mr. Hirsch, with ATB Financial, says the rebound of Calgary's economy is happening very gradually. "We're out of the recession, but we're in that recovery period that's still feeling kind of sluggish," he says.

"The all-important indicator for consumer confidence is still going to be the unemployment rate, and right now it's stuck at 8 per cent [in Alberta]."

Some Calgary business owners, like David Crosby, CEO of Rosso Coffee Roasters, are bucking the trend. "We're very lucky being in the coffee industry. It's an affordable luxury," says Mr. Crosby, whose business grew from three café locations to seven in just over a year, earning it the title of Calgary's 2017 small business of the year from the city's chamber of commerce.

But even an expanding business like Rosso's faces challenges. In addition to the cafés, Rosso runs a wholesale business roasting and supplying coffee to shops, restaurants and offices. Mr. Crosby says about a dozen clients went under in the past year.

"One week we would drop off coffee, and then we would go to drop off coffee the next week and they'd just closed up shop and left a note on the door," he says.

It doesn't help that the company expects a slowdown in the new year when the food industry traditionally suffers as the weather cools and consumers tighten spending following the holidays.

Overall, though, Mr. Crosby is feeling optimistic. "At the end of the day, Calgary is such an entrepreneurial city, and if there's a will there's a way," he says.

Jamie Clarke, co-founder and CEO of Calgary-based Live Out There, is one of many small business owners who shuttered a shop during the recession. Clarke's downtown outdoor apparel store, Out There, closed this June after 14 years.

But Clarke, an adventurer who has twice climbed Mount Everest, isn't giving up on being an entrepreneur in Calgary. He turned his attention to the online side of his business and relaunched in mid-November as an e-commerce company making outdoor products and selling them to consumers across North America. He says a combination of a shifting retail landscape and Calgary's slumping economy spurred the expansive changes at Live Out There.

"It's beyond pivoting. It's an absolute rebirth of our business," Mr. Clarke says. While Mr. Clarke previously sold outdoor apparel online, his new business model involves manufacturing the gear, a step he says ensures better quality, transparency, and pricing for consumers.

Now, heading into his first holiday season since closing his downtown store, Mr. Clarke says he's excited. "I feel battle-tested in ways I've never known," he says. "We got beaten up and broken but we refused to buckle, and I am proud of our effort to not give up."

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