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A man wearing a protective face mask walks through a sparsely occupied open-air shopping mall amid concerns about the coronavirus, in Richmond, B.C., on March 15, 2020.

DARRYL DYCK/The Canadian Press

Businesses across the country are scaling back or even shutting down as consumers and their own workers retreat into their homes to blunt the public-health threat posed by the novel coronavirus, as markets took their most dramatic plunge since 1987.

The TSX Composite Index fell 9.9 per cent on Monday and has tumbled by more than 30 per cent since Feb. 20. In the U.S., the S&P 500 fell 12 per cent and the Dow Jones Industrial Average dropped a record 3,000 points, or nearly 13 per cent.

Many of Canada’s biggest lenders are projecting that the country will head into recession, and economic forecasts around the world are being discarded to reflect rapidly deteriorating financial outlooks.

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Looking to cushion the economic fallout from the coronavirus, the Bank of Canada and other central banks have moved aggressively to inject hundreds of billions of dollars into the economy, including through drastic cuts to benchmark interest rates.

On the battle against the coronavirus, Prime Minister Justin Trudeau underscored the critical importance of social distancing on Monday, saying “all Canadians, as much as possible, should stay home.”

But Mr. Trudeau did not move beyond moral suasion, leaving no clear national standards for businesses to follow. Provinces and cities are applying different guidelines – some mandatory, some voluntary – that have an effect on business operations.

The retail sector has been hit hardest by the economic consequences of the virus, both by the drop in consumer demand and, in some parts of the country, formal restrictions on operations. Some stores are shutting down their bricks-and-mortar operations and others are reducing operating hours. Restaurants, including McDonald’s Canada, are moving to eliminate dine-in service.

Many cinema chains remained open during the weekend, while implementing social-distancing procedures, such as restricting the number of people permitted into each screening. On Monday evening, however, Cineplex Inc. announced that it would be closing all of its ​165 movie theatres, as well as entertainment venues such as The Rec Room and Playdium, and would reassess whether to open again on April 2.

For the moment, the manufacturing sector is avoiding serious disruption. The supply chains that criss-cross the U.S.-Canada border remain vulnerable, although there is a sense of relief that the tighter border control measures announced Monday exempt U.S. citizens, safeguarding the flow of goods north and south.

Unlike other sectors, however, manufacturers are unable to free large parts of their staff to work from home. “You can’t run a factory from home, you can’t drive a truck from home," said Dennis Darby, president and chief executive of Canadian Manufacturers and Exporters.

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Bombardier Inc., one of the largest industrial employers in both Canada and Europe, said it suspended all production at rail-equipment plants in Crespin, France, and Bruges, Belgium. Its Canadian manufacturing sites, including business jet and rail-equipment factories in Quebec and Ontario, remain open with additional cleaning and disinfection measures in place, the company said.

Even as Ottawa decides how it will support workers and employers, some businesses are vowing to continue to pay the wages of laid-off staff.

And businesses of all stripes are focused on the worries of cash flow over the coming weeks. The social distancing used to fight the virus will wreak collateral damage on consumer spending, leaving companies deciding whether to shut down to conserve cash, or keep operating to retain and support their workers.

"There’s a very difficult balancing act employers have to do,” said Dan Kelly, president and CEO of the Canadian Federation of Independent Business.

While the federal government has not provided details on how it may support individuals and employers, businesses are hoping for measures that will allow them to cross the economic desert of the next few weeks: deferred taxes, easier loan terms or even grants.

Mr. Darby said production from China is starting to rebound, but that a major source of uncertainty is whether U.S. suppliers will experience similar disruptions that will then flow through to Canadian companies. Another complicating factor: Inventories were only just beginning to rebuild after the rail blockade earlier in the year, so businesses have not had an opportunity to stockpile supplies.

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Many retailers are shutting down or significantly scaling back operations. But some major brands are committing to continuing to pay at least some of their staff’s wages.

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 had 391 locations in total in those regions, according to the most recent numbers reported by the company. Aritzia, also based in Vancouver, 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 closings, any profit that the company makes, such as through e-commerce sales, will be redirected to a “relief fund” to support employees who are affected.

Similarly, 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.

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.

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Several governments, including Quebec and the city of Calgary, have announced restrictions on ​public gatherings, including the service areas of bars and restaurants. But other jurisdictions, including Ontario, Edmonton and Vancouver, are urging only voluntary measures.

Vanessa Salopek, owner of MARKET Calgary, a normally busy spot in the city’s entertainment district, said she’s still trying to figure out what the restrictions mean for her business and her staff. "Our focus is definitely on takeout and delivery. We want people to self-isolate, and so that’s where we’re going.”

Some companies have been directly affected; gold miner Iamgold Corp. shut its Toronto head office for the week after an employee tested positive for the virus.

In the oil patch, more companies are aggressively cutting capital budgets and their forecasts for crude production as oil prices continue to plunge, bringing the sector’s spending cuts in Canada to more than $2-billion. Martin Pelletier, portfolio manager at TriVest Wealth Counsel in Calgary, said some energy companies simply aren’t going to survive the “double threat” of the coronavirus and cripplingly low oil prices. The only hope he sees is a multibillion-dollar cash injection from the federal government.

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 Marks and Sport Chek stores. Like many retailers that are remaining open, the Toronto-based company said it is increasing the frequency of store cleanings.

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 takeout, drive-through and delivery service. Starbucks Canada said Sunday that it would shift to a to-go model across Canada, and would close some stores.

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Restaurant conglomerate MTY Food Group Inc. kept its locations open, but said Monday that it will postpone collecting between $15-million and $18-million in royalties from its franchisees (which include 80 restaurant banners such as Country Style, Tiki-Ming, Thai Express and Big Smoke Burger) for four weeks starting Tuesday, as food courts empty out.

Late Monday, Recipe Unlimited Corp. said it is closing dining rooms for all of its brands, which include Swiss Chalet, Harvey’s, The Keg and St-Hubert.

With reports from Michelle Carbert, Joe Castaldo, Emma Graney, James Keller, Niall McGee and Nicolas Van Praet

A small-town bakery rises to the challenge of coronavirus

Jessica Root and Jason Butler, owners of Bakery Warkworth, are pictured in their shop in Warworth, Ont. in this file photo from March 14, 2020.

Lars Hagberg/The Globe and Mail

At this time of year, the Bakery Warkworth and other local retailers would typically be counting profits from the village’s annual maple-syrup festival, which provides much-needed cash flow after the sparse sales in January and February.

Instead, owners Jessica Root, 31, and her husband Jason Butler, 30, have shut down their Ontario storefront and are facing the unnerving prospect of trying to reinvent their business on the fly, hoping they can generate enough cash to stay afloat.

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Now, a business that depends on word of mouth and walk-in customers is suddenly having to reinvent itself as a takeout-only operation – one of thousands of retailers across the country adjusting to the sudden, harsh and necessary economic reality of social distancing.

“I can’t apply for EI because we don’t pay ourselves,” says Ms. Root, who adds that she hopes that the government focuses any aid on more vulnerable people, such as single moms.

The couple and their one employee will reduce their sales week to just three days; customers will be asked to make their selections ahead of time and book a 15-minute window to pick up their order from a table just outside the store. Payment will be by electronic means only.

Will it work? Ms. Root isn’t sure, although she says she is struck by the amount of support in the community. She hopes that the couple’s business could emerge stronger, eventually: There are discussions with a local grocer about stocking the Bakery’s products. And she and Mr. Butler had been mulling a move to a three-day sales week for some time. Now, necessity has forced that innovation, but Ms. Root said it could mean a more efficient operation later on. “Do I think there is a light at the end of this? For sure.”

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