The latest month-long lockdown mandated by the Ontario government will deal a crushing blow to many small businesses in the province who have been hanging by a thread for months.
“Small businesses are tired of being a scapegoat for the Ontario government’s lack of planning or foresight. For months, they have been told that there is light at the end of the tunnel and for months nothing has changed,” said Ryan Mallough, Director of Provincial Affairs for Ontario, for the Canadian Federation of Independent Business.
“Toronto and Peel have been largely shut down since November while cases have climbed and fallen and climbed again in that timeframe with thousands of small businesses never seeing a single customer. To continue the same broken approach is a choice. A choice that is costing thousands of Ontarians their jobs and livelihoods. We have to do better.”
Mallough said 74,000 additional businesses are in danger of closing due to the pandemic. The latest lockdown will accelerate business closures.
“It’s grim,” he said. “The support grants (from government) are nice but with the mounting debt, with having to pay employees, and all the uncertainty around when you’re going to be able to reopen — I don’t think anyone expects everything to be open a month from now at full capacity — it’s going to take a while to ramp up and it’s a very long road ahead when it comes to even starting to talk about recovery.”
On Thursday the Ontario government announced a provincewide “emergency brake” for at least four weeks that includes limiting indoor/outdoor gatherings to a maximum of five people, 50 percent capacity limits for grocery and convenience stores, no indoor or outdoor dining, and a 25 percent capacity for big box and other retailers.
“We are facing a serious situation and drastic measures are required to contain the rapid spread of the virus, especially the new variants of concern,” said Premier Doug Ford. “I know pulling the emergency brake will be difficult on many people across the province, but we must try and prevent more people from getting infected and overwhelming our hospitals. Our vaccine rollout is steadily increasing, and I encourage everyone who is eligible to get vaccinated. That is our best protection against this deadly virus.”
The provincewide emergency brake will be effective Saturday, April 3, at 12:01 a.m. and the government intends to keep this in place for at least four weeks.
“We think the province is going down the same road that they’ve gone down for the last six months that hasn’t worked. We have parts of the province where restaurants have been closed for six months. We haven’t seen restaurant closures affect a downward trend of (COVID) numbers at all and we think this is the wrong thing to do,” said Rilett.
He said this would definitely accelerate the closure of more restaurants in the province.
“It was only 12 days ago that public health officials were encouraging people to open their patios. So they’ve invested money, they’ve invested time, they’ve hired back staff with that in mind,” added Rilett. “And they were just thinking, okay finally light at the end of the tunnel. And that’s been yanked away from them. I’m sure a lot will say this is the last straw.”
Daniel Safayeni, Vice-President, Policy, at the Ontario Chamber of Commerce, said the province’s business community is understandably frustrated with the current situation.
“Seeing our southern neighbours being inoculated while we wait perhaps adds to that as well. But really the bottom line is delays in distribution are heavy blows to businesses who are going through further restrictions and lockdowns,” he said. “We urge all orders of government to work together on this and to be as clear and consistent as possible around what warrants changes in lockdowns.
“The lack of predictability is adding to this growing frustration. And so while we strongly believe public health and a healthy economy are interdependent, we realize right now we’re in the midst of a third wave. ICU capacity is at a critical level. This is all greatly concerning and we can’t pave a path to recovery without first controlling the virus. We understand this acutely but at the same time we’ve repeatedly expressed our concerns now at this point about inconsistent and unclear public health guidelines that trigger a shutdown and what we can do to improve that situation.”
Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail, said another shutdown in Ontario will continue to weigh on an already struggling retail industry.
“Although the lockdown is needed, it causes further strain on an industry hanging on by a thread. Some retailers will need to lay off staff again and will have brought in inventory in anticipation of the spring season,” said Winder.
“Restaurants will have food that will spoil as patio business is lost. Perhaps one positive from this lockdown is that non-essential retailers will be allowed to open at 25 percent capacity — which offers some relief. Those that count April as one of their biggest sales months will need to scramble to pivot quickly. Government subsidies continue to help those that qualify but they can’t last forever. One of the most damaging byproducts of this pandemic is the deterioration of mental health in retail (and all industries). This issue desperately needs more attention and resources from governments and businesses alike. Ontario has lost round one in the race between inoculation and variants of concern.”
If there was ever anything that could derail morale of small business owners and all businesses it’s a third lockdown, said veteran retail expert George Minakakis, a global retail executive with over 25 years of experience and CEO of the Inception Retail Group.
“But we shouldn’t be surprised by it. We reopened and the number of cases never really got under 1,000 per day. Just today we are over 2,500. I was surprised we even expanded restaurant dining about a week ago,” he said.
“I already know of retail chains that are not making rent payments. I can only begin to imagine the number of small businesses that are in the same situation. And what bank covenants have been breached by them, from not having enough sales?
“It is my opinion that the business recovery is now not going to begin until 2022 because of this current situation. And it solidifies that the retail landscape will be more different than we first imagined.”
He said this lockdown could go longer than expected with the new variant.
Whether businesses were allowed to stay open or not consumers have been trained to react and stay at home.
“We already have excess capacity in available vaccines. Part of the problem is the AstraZeneca news and that likely has the public concerned. Which means more delays in a recovery. You can’t force the public to line up for something they question,” he said. “You need a very powerful and trustworthy PR campaign to convince the public that it is safe.”
Minakakis said the provincial and federal governments will have to do a lot more than count on pent-up demand for example for hair cuts or the idea of revenge shopping to reboot economies.
“I am also very doubtful of consumers opening their bank accounts to spend their “excess” savings. That whole concept is contrary to telling Canadians they are carrying too much debt. Especially if we don’t know what the future is going to be like. This means e-commerce will take more share as will the likes of UberEats,” he said.
“I know this all sounds dismal however, this looks more like a domino effect to me with a whole set of underlying issues that will surface and cascade, making a recovery even more challenging. Even if we ride this third wave out we will be behind in any recovery plan and small businesses will fail silently during this period. The only saving grace for them will be how benevolent landlords and banks will be.”
The CFIB is calling on provincial governments across Canada for lockdown alternatives and increased financial support for small businesses as provinces announce or consider a third round of closures across the country.
On average, Ontario small businesses have taken on $207,000 in COVID-19-related debt. Three quarters of them report that it will take more than a year to pay off, added the CFIB.
“It is unconscionable that over a year into the pandemic governments continue to rely almost exclusively on blanket lockdowns,” said CFIB President Dan Kelly. “The first two shutdowns were devastating with one in six businesses considering permanent closure, for an estimated 74,000 permanent small business closures expected in Ontario. A third round will only ensure that number grows higher.
“More than 70 percent of small businesses across Canada report that government supports are essential to their survival. Lockdowns do not stop bills from coming in. We urge governments to extend their application deadlines, broaden eligibility, and increase payments to recognize the impact new and prolonged lockdowns and restrictions are having on local businesses.”