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Pandemic ‘Fourth Wave’ Would be Devastating to Retailers and Businesses in Canada Trying to Come Back from a Year and a Half of Restrictions: Experts

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A potential ‘fourth wave’ of the COVID-19 pandemic would be devastating and lead to many business closures across the country, particularly for businesses that have been hanging by a thread through the economic turmoil of the past year and a half.

According to a recent survey by the Canadian Federation of Independent Business, more than 80 per cent of small businesses have not fully recovered from the pandemic with that share rising above 90 per cent for hard hit sectors like arts and recreation (95 per cent) and hospitality (96 per cent). And businesses that have not recovered say it will take them an average of 23 months to get back to normal.

Corinne Pohlmann

Corinne Pohlmann, Senior Vice-President, National Affairs and Partnerships for the Canadian Federation of Independent Business, said another shutdown in the country would be “pretty devastating.”

“Many of them are finally feeling a bit more certainty with consumers walking through the door but they still have lots of debt to pay off. They’re still not back to normal sales. There’s only about 35 per cent that are back to normal revenue. So many of them are still struggling and are very much reliant on the wage subsidy and the rent subsidy that have been available through the course of the last six months but are now starting to go down and eventually will disappear,” she said.

“A fourth wave is not welcome at all. We’re trying to pressure governments to think about how do we stay open even if things start getting worse again. What can we do? We have more tools in our toolbox that we can work with whether it’s rapid testing, vaccinations, other tools, we know about mask wearing, and other things that can be done in order to sort of minimize the need to actually go into full lockdown because that would probably kill even more companies because of just not having been able to make revenues. They need to be able to be sustainable for more than just two or three months at a time. They need to be able to stay open a lot longer than that.”

Several months ago the CFIB asked business owners if they were actively considering shutting down their business. At the time, about one in six to one in seven said they were.

James Rilett, Restaurants Canada Vice President, Central Canada, said he doesn’t think we’ve seen the full impact of the third wave yet.

James Rilett (Photo Restaurants Canada)

“As people are getting reopened, they’re just trying to get their heads around whether to continue on in business. But I think a fourth wave would be the last push on many of them. But I don’t think the impact will be as stark because we’ve already seen that for a lot of businesses. There’s less people around to start with,” he said. “But hopefully governments will find ways of keeping people open to greater levels than before.

“With things like vaccine passports that some of the provinces are putting in, that seems to be a good concession to full closure.”

The economic impact of a fourth wave would be difficult for many businesses but Rilett said there’s also the emotional impact to consider.

“Do I want to go through this again? Do I have it in me to do this a fourth time? Ad infinitum. Will it ever end? That will come into play too. A lot of people have just had it with trying to stay open.”

A fourth wave would be bad for any business in Canada but those ventures in the hospitality industry would hurt the most.

“We estimate even when we get fully reopened it’s 12 to 18 months before we’re back to profitability. For many they just won’t want to continue on and restart that clock again. How many would be able to make it through that extended period before they can start to get some money in and start getting that debt down?,” he asked.

Michelle Wasylyshen, spokesperson for the Retail Council of Canada, said a possible fourth wave would be bad for retailers across the country.

Michelle Wasylyshen

“The most important thing to retailers is that they definitely not be shut down again if case counts continue to rise in the fall. That is what we’re saying is the most important thing. It’s difficult to fathom that one would be supportive of another round of lockdowns. We would certainly hope that any province would limit any future restrictions to places where transmission is occurring and that there would not be one set of rules for all environments,” she said.

“The reason why we say that is because we have tracked the governments’ own data and daily case counts have consistently shown that COVID transmissions arise primarily from social interactions, some workplace, but not from brief economic activities such as you find in retail settings. What we want is to ensure that there are no further shutdowns, no further blanket approaches, because in our opinion that would result in unnecessary economic damage, job loss and business closure, without the improvement of any health outcomes.

“It’s going to take a long time for Ontario’s businesses or Canadian businesses across the country to recover from these government mandated lockdowns . . . The sooner retailers have stability the sooner they can start seeing real progress in making up for those (lost) revenues.”

Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail, said Canada faces a potential fourth wave as the Delta variant takes hold across the world. Will governments impose another shutdown or leverage a vaccine passport system to control the spread?

Bruce Winder

“The appetite for the economy to close is small as elections are on the horizon and voters are fed up with this way of living. The key will be whether the fourth wave can be managed within existing health care infrastructure and how many more Canadians will opt in for immunization,” said Winder. “Another lockdown would be devastating for many small to medium sized Canadian retailers and other businesses as they swim in debt and face changing consumer purchasing habits that challenge legacy business models and legacy profitability.

“Although government subsidies have been extended, there is only so much more that small to medium sized businesses can absorb before shutting down permanently. Many have enormously high debt to equity ratios and face a steep climb paying back loans in the future.

“Another issue that these companies face is changing shopping habits from customers. E-commerce has become a significant distribution channel as pandemic inspired online shopping has remained strong. This means that retailers don’t need as many stores and the stores that remain will change. Many small to medium sized retailers do not have the room on their balance sheet to borrow capital to change their operations – whether that be for renovations or other capex initiatives.”

Winder said  businesses of all sizes face enormous supply chain challenges and cost pressure due to a perfect storm of material cost increases and logistics congestion/cost increases across the board.

“One saving grace is the ease with which small to medium sized businesses can get online. With firms such as Shopify, Lightspeed Commerce and Amazon, it has never been easier for companies to take advantage of ecommerce’s growth. Small to medium sized retailers need to integrate bricks and clicks capabilities to try and weather the storm. E-commerce represents another lifeline to help business stave off bankruptcy,” he said.

“As we appear to enter a fourth wave, albeit smaller in magnitude, I hope that Canada can avoid another shutdown. I know it is controversial for me to say so, but I personally hope more people get vaccinated to protect not only themselves but others too and our fragile economy.  We may see vaccine passports utilized in more provinces as an alternative to another shutdown. I would prefer that option.”

Michael Kehoe

Michael Kehoe, broker/owner of Fairfield Commercial Real Estate, said a potential fourth wave of COVID 19 or its variants could lead to government mandated further restrictions on shopping and dining venues.

“It would be different for each province and region depending on the severity of the future infections if any. Many Canadians and especially small business owners are fearful that their freedoms can be taken away by various levels of government. This is affecting business confidence and stunting new business ventures that absorb vacant commercial space and drive employment,” he said.

“The threat of a resurgent lockdown will always be with us unfortunately, but will consumers and business owners put up with it given the high level of vaccination rates in Canada? I hope that we are open for good across the country without restrictions but as long as some provinces unnecessarily remain in the grips of fear that may not be the case. We need to accept that COVID is as endemic as influenza and let business look after business.”

Article Author

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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