Retailers shutting down or limiting service amid coronavirus concerns

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As concerns mount about Canada’s ability to contain the spread of COVID-19, many retailers providing non-essential services are shutting down temporarily or are making significant changes to business operations.

Canadian apparel retailers Lululemon Athletica Inc. and Aritzia Inc. both shut down stores starting on Monday. Vancouver-based Lululemon decided to close stores in North America and Europe until at least March 27; it has 391 locations total in those regions, according to the most recent numbers reported by the company. Vancouver-based Aritzia has 94 store locations according to its most recent reports.

"We saw calls for social distancing, and shopping centres fall into that. ... It's affecting sales, but that's not why we're closing stores," Aritzia CEO Brian Hill said in an interview. "It's time for Canadians to do what's right here, and to look after people and their health."

Aritzia has not yet set a date for its stores to reopen. During the closures, the company's profits will be redirected to a "relief fund" to support employees who are affected. Mr. Hill said that some of those funds may also be directed to supporting partners at factories overseas, which are operational but have seen a dip in demand as businesses in Europe and North America scale back.

Lululemon CEO Calvin McDonald said in a statement that staff would receive pay for any shifts they were scheduled to work during its stores’ shutdown.

“We are living in uncertain times and we’re learning more about this virus every day. We are taking this step to … ensure we are doing our part to prevent the spread of COVID-19,” Mr. McDonald wrote.

A number of retailers including Apple Inc., Nike Inc., Abercrombie & Fitch Co., Urban Outfitters Inc., and Under Armour Inc. all announced on the weekend that they would be closing stores temporarily, including in Canada.

Canadian Tire Corp. Ltd. issued a statement on Monday saying that its flagship stores are staying open to provide certain “essentials” such as bathroom tissue and hand sanitizer; but that it would reduce opening hours at its Mark’s and SportChek stores. Like many retailers that are remaining open, the Toronto-based company said it is increasing the frequency of store cleanings.

“It’s true that the supply of some essentials is becoming increasingly limited … we are working closely with our suppliers to ensure that we are replenishing as quickly as possible,” CEO Greg Hicks said in the statement. “To allow everyone to get what they need, many of our stores have put limits on the number of high-demand products, such as hand sanitizer and bathroom tissue, that a customer can purchase at one time.”

Montreal-based Dollarama Inc. also said in a statement that its stores are remaining open because they provide “necessities, including household and cleaning products, health and hygiene products as well as food products.”

Some food retailers, including coffee shops, have remained open but restricted some services. Tim Hortons sent a notice to its franchisees on Monday morning instructing them to close in-store seating areas until further notice, providing only take-out, drive-through and delivery service.

Starbucks Canada announced on Sunday that it would also shift to a to-go model across Canada and would close “company-operated stores in high-social gathering locations like stores that are located inside malls or on university campuses.” A spokesperson declined to specify which locations would be closed and directed customers to check the website’s store locator ​– but she said it would take some time for the information to be updated. On Monday, the website still listed many locations as open, including in malls and universities.

Restaurant conglomerate MTY Food Group Inc. kept its locations open, but said on Monday it will postpone collecting royalties from its franchisees for four weeks starting Tuesday, as food courts empty out. The company said it expects the amount of royalties to be deferred to total between $15-million and $18-million.

Montreal-based MTY owns a portfolio of more than 80 restaurant banners, many of them located in food courts where people often eat in close proximity. They include Country Style, Tiki-Ming, Thai Express and Big Smoke Burger. The company has 7,373 locations, more than half of which are in the United States and 38 per cent in Canada.

As public-health officials urge people to stay home to help curtail the transmission of the novel coronavirus, businesses are faced with difficult choices.

Toronto-based Knix Wear Inc., which sells undergarments, swimwear and loungewear, decided last Thursday to close its two stores in Toronto and Vancouver. CEO Joanna Griffiths said she was concerned about close contact in fitting rooms, because staff often measure customers to help them find the appropriate size, an integral part of the stores’ operations. “I just couldn’t imagine the responsibility we would feel if someone on our team got sick because of work,” she said in an interview.

The company is taking a sales hit from closing the stores while continuing to pay store employees and cover other expenses. However, Knix is fortunate in the sense that its business began online and e-commerce still makes up roughly 90 per cent of its sales. Not all retailers are in that position.

“We expect [e-commerce] to make up for some of the lost stores sales for many retailers, though even a spike in [e-commerce] sales would unlikely be enough to offset stores being completely closed for several weeks,” Citigroup retail analyst Paul Lejuez wrote in a research note on Monday.

Many retailers’ stocks took a hit in trading on Monday. Aritzia’s Mr. Hill said that while the brand has a strong online presence to offset the impact of temporary store closures, shopping for clothes is not a priority for consumers at the moment. “The whole industry is seeing that right now,” he said.

Britain-based cosmetics brand Lush announced on Sunday that it would close 258 stores in the U.S. and Canada from March 16 until March 29. “As our products are made fresh by hand, weekly for our shops, these closures will require us to significantly scale down our manufacturing and distribution operations for the duration of the shop closures,” the company said in a statement.

Many cinema chains remained open on the weekend, while implementing social-distancing procedures such as restricting the number of people permitted into each screening. However, following requests from the Quebec provincial government, Guzzo Cinemas closed its theatres on Sunday, until March 26.

Some smaller independent cinemas also made the decision to close on the weekend. The Hot Docs documentary festival slated to begin in late April in Toronto was cancelled last week, and the Hot Docs movie theatre in downtown Toronto closed its doors on Sunday, until April 10. The theatre had already taken measures such as not accepting cash, closing down every other row of seats and only selling prepackaged food – meaning popcorn was out.

“By Saturday morning, it was an eerie feeling in there,” Alan Black, managing director of the Hot Docs Ted Rogers Cinema, said in an interview. At a screening on Saturday afternoon that had sold approximately 200 tickets, roughly 79 people showed up, he said.

Hot Docs is a non-profit organization and is run partly by volunteers, but also had some staff on hourly wages that the organization has had to lay off temporarily. Mr. Black said that as a theatre with distinctive programming, Hot Docs does not compete as much with Netflix as larger theatre chains do, but he still worries about the impact of the virus and closures on customers’ habits.

“We’re all dealing with the concern that the more people get used to watching movies at home, the less likely they are to return,” he said.

With a report from Nicolas Van Praet

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