MONTREAL — Canada is bracing itself for the economic fallout of SARS.

With the Toronto area generating approximately one-fifth of all of Canada’s economic activity, what’s good for Toronto is good for Canada. The reverse is also true.

This story first appeared in the April 28, 2003 issue of WWD. Subscribe Today.

The city’s retailers, restaurants, hotels and other businesses already have been hit with the number of SARS cases diagnosed there, and the situation is expected to worsen following last week’s warning by the World Health Organization against any nonessential travel to Toronto. According to official figures, retailers are experiencing declines in traffic of anywhere from 10 to 30 percent, with the higher figure being in the city’s tourist-heavy downtown area. Several Canadian conventions have been canceled, and it’s a safe bet the average number of 15 million visitors to Toronto each year will drop significantly. Bus tours from U.S. border towns are being canceled, and some hotels have vacancy rates of more than 70 percent.

When WHO issued its warning last week, Toronto Mayor Mel Lastman reacted angrily, challenging WHO officials to visit the city to see everything was normal. Lastman claimed its warning was irresponsible because it had not contacted Canadian health officials. Further, Richard Schabas, Ontario’s former chief medical officer, claimed the SARS outbreak peaked a month ago in Canada.

According to figures from the World Health Organization and the Ontario Ministry of Health, there have been 4,836 cases of SARS diagnosed in 26 countries, including more than 269 in Canada. 293 deaths have been reported, with 20 occurring in Ontario.

Fear of attracting SARS in Canada was somewhat reduced when the Atlanta-based Centers for Disease Control and Prevention said the risk of contracting SARS in Canada was no greater than in any other country. The CDC also said there was no reason to avoid travel to Toronto, or any other Canadian city, as long as travelers took precautions, such as avoiding hospitals unless absolutely necessary.

“People are completely overreacting and are making decisions based on what they read in print and not on medical information,” said John Houghton, vice president of sales and marketing for the Toronto Convention Center.

The scare is even being felt in Quebec City, some 500 miles from Toronto, where registrations for conventions are down by 30 percent. That worries Pierre Bellerose of Tourism Montreal, who said it’s an indication that many people don’t have a clear understanding of the geography of Canada.

About a third of Ontario businesses said they have been impacted by the SARS scare, according to a survey by the Ontario Chamber of Commerce. The biggest loser is the hospitality sector, where sales are down by about 30 percent, while the retail sector says sales are off by 10 percent. Toronto’s Mayor Lastman has estimated retail sales are off 20 percent, and reports of 30 percent declines also have appeared in the Canadian press.

Asked about the retail falloff, Brad Ross, a spokesman for the city of Toronto, said, “We don’t know yet. We’re still trying to assess the economic impact.”

So far, though, retailers are putting on a brave face, insisting they haven’t seen any falloff in business because of the epidemic. One of the few that has admitted a falloff is Sears Canada, which has about 16 stores in the greater Toronto area.

“There’s no question we’ve been impacted by SARS, but we won’t have any concrete numbers until the end of the second quarter,” said company spokesperson Kim Daynard.

Her sentiments reflect those of her boss, Sears Canada chief executive officer Mark Cohen, who told annual meeting attendees last Tuesday that sales should start to improve late in the second quarter as the effects of the Iraqi war and SARS dissipate.

Sears also is advising employees to contact local health officials if they believe they’ve been exposed to the SARS virus.

Others continued to insist it was business as usual. Gap Inc. canceled a fashion show scheduled for the media last week in Toronto, while the head office in San Francisco has banned all travel to and from Toronto. Company spokeswoman Claudia Hawkins said Gap Inc. won’t know sales figures for Gap, Banana Republic and Old Navy stores in Canada until the end of the month, but added “shipments of goods in Toronto are moving without incident.”

Wal-Mart also has banned travel to Canada, where the company operates more than 200 stores. Yet most apparel retailers claim their business has not yet been adversely affected by the SARS scare.

“Sales have actually been strong in the last two weeks because of the warmer weather,” said Luiga Direnzo, manager of a Liz Claiborne factory outlet in the Toronto suburb of Mississauga. She said it’s been a poor year because of the economy and unseasonably cold winter and spring. “But we’re seeing new customers who are buying tops, blouses, skirts and pants.”

Jeans Experts, with two outlets in the Toronto area, doesn’t think SARS has had any impact on business. “We seem to be OK because neither one of our stores is in the downtown area,” said co-owner Jacob Crudo. “I think downtown stores are probably suffering more than most. And I know they canceled a luggage show that was scheduled for this weekend and rescheduled it for July.”

The Retail Council of Canada surveyed its members last Thursday, and the majority said SARS hasn’t had any impact on their businesses.

“We’re seeing more of an impact from the cold weather than SARS,” said the council’s Sharon Maloney. “Everything is in such a state of flux, and the pictures of people wearing masks are not what’s happening in Toronto. The WHO pronouncement is totally irrelevant.”

Holt Renfrew spokeswoman Janet Eger agreed, saying the store’s annual Girls Night In after-hours event last Wednesday was sold out. “It’s business as usual as far as we’re concerned.”

At Langton Salon/Spa, located in downtown Toronto’s Design District, business has not dropped off, but customers are becoming increasingly edgy — not that surprising given the hands-on nature of the trendy shop’s services, which include hairstyling and facial treatments.

“Clients are calling in and hinting around, asking, ‘Is everyone okay? Does anyone have a cold?’ And I say we’re SARS-free,” said Monica Neish, manager of the two-level, 1,700-square-foot salon. “When people come in and they cough, they laugh and say, ‘Oh, I don’t have SARS’ — it’s almost a sadistic joke.”

Neish added, “There’s probably a slight percentage of people who are not coming in, but let’s face it, people need to be groomed, so we’re not being as hard hit as others.”

Despite the media frenzy over the SARS outbreak, most shoppers in the Toronto area have not curtailed their shopping habits.

“I actually just came back from shopping at Banana Republic and Club Monaco on Bloor Street,” said Stefanie Pacitti, who works at Alliance Atlantis Productions as a TV sales coordinator. “I don’t feel I’m putting myself at risk. I’m more diligent perhaps with what I’m touching, and I do wash my hands more frequently, but I am not about to wear a mask.”

Renee Layne, who lives in the shopping-mall-heavy Toronto suburb of Scarborough, said, “I’m out there shopping. It’s not at the point where it’s going to keep me in the house. I was at the Eaton Centre, where there was still a fair amount of people, but I would say there were still fewer than normal.”

Another Toronto resident who said she isn’t buying into the media hoopla is Rosalie Muia, a production coordinator at The Weather Network, who is frequenting the city’s West End malls, as well as the tony downtown shopping area, Yorkville. “I have not changed my lifestyle in any way; I’m still going out shopping and eating,” she said. “I was at Sherway Gardens and Square One [shopping malls], and they were packed. I haven’t seen a soul wearing a mask at the malls. I was also in Yorkville, where it was busy — but they were people who live here and not tourists.”

Erin Sufrin, a publicist who works on Bloor Street next door to Holt Renfrew’s flagship, said, “It seemed to be business as usual” at the store, where she spends many lunch hours perusing designer fashions. In fact, she added that she noticed fewer shoppers in the thoroughfare’s stores during the initial days of the SARS outbreak.

“There were less shoppers a week ago, when people were more fearful of being in public,” she said, “but some of the messages in the media that you can’t get it from casual contact have brought people back to the stores.”

While many residents are still heading to shopping areas in the city’s downtown, as well as suburban areas, many shoppers are avoiding Chinatown because of the disease’s association with the city’s Asian population. “I needed to get housewares from Chinatown, but I just decided not to because of the whole SARS thing,” Sufrin said.

Margaret Horan, a project manager for a downtown consulting firm, said she had no qualms about visiting large shopping malls, but Chinatown, for her, is off limits. “I was at the Eaton Centre, and I walk through the Yonge-Eglinton Mall [in midtown Toronto] every day,” said the 28-year-old, “but I will not go to Chinatown — it’s crowded and dirty.”

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