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Some Toronto area retailers and restaurateurs saw business slow this week after Ontario issued an alert about severe acute respiratory syndrome (SARS), and they are bracing for lighter sales this weekend.

Concerns about the mystery illness and its impact on sales have overshadowed worries about the war in Iraq, said Diane Brisebois, president of the Retail Council of Canada.

"There's no question that a lot of people are saying they're staying home and away from crowds," Ms. Brisebois said yesterday in an interview. "There's a good chance people will stay away from shopping malls . . .."

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"Retailers are going to be challenged to make their numbers, especially in Ontario."

Some smaller retailers have called the retail council asking whether they should close their shops or take other precautions, she said, although she wasn't aware of any store that had actually shut.

And a number of Toronto-area restaurants have been pinched, some severely.

China Buffet King in the suburb of Scarborough has seen sales slide more than 50 per cent, and a few groups have already cancelled parties at the 500-seat eatery, owner Peter Yam said.

"I think it [SARS]is directly hurting us -- and not only us, all kinds of restaurants," Mr. Yam said.

The medical scare comes as merchants experience a sluggish March, particularly when compared with a year ago when Easter fell in that month and helped drive up sales, industry observers say.

The SARS scare will only exacerbate a difficult retail climate, and could shrink sales more if the illness spreads across the country, they said.

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They said the outlets most affected are in Toronto communities close to Scarborough Grace Hospital, which was hit by the mystery virus, as well as areas with a high Chinese population.

Asian neighbourhoods are concerned because many of their residents have travelled to locations in Hong Kong and mainland China where the ailment first surfaced.

Katz Group Canada Ltd., which runs more than 1,000 drugstores under the Pharma Plus, Rexall, IDA and other banners, has found that prescription sales are down between 25 and 30 per cent in outlets in Scarborough and other areas tied to the SARS outbreak, president Larry Latowsky said.

Some doctors' clinics have closed, which has cut business significantly at neighbouring drugstores, he said.

"I do anticipate -- in some markets -- decreased traffic," Mr. Latowsky said. "I think people are staying home."

He said that if shoppers aren't coming in to pick up prescriptions, they're also not making "impulse purchases" such as potato chips or buying other things.

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The drugstores have been trying to stock up on the recommended masks to protect against the spread of the virus, but there are just not enough of them available from suppliers, he said.

At Pacific Mall in suburban Markham, Ont., the largest Chinese indoor mall in North America, business has plummeted between 30 and 40 per cent over the past few days, said mall promotions manager Peter Ly.

He said unfounded rumours have spread on the Internet that employees at Pacific Mall and other Chinese shopping centres and restaurants are infected with SARS.

"I believe after the rumours are clarified, business will be back to normal," said Mr. Ly, who is planning to lure shoppers by giving away 400 10-kilogram bags of rice on Good Friday.

Andrew Pelletier, spokesman for Wal-Mart Canada Corp., said it isn't seeing any major dent in business as a result of the SARS situation.

He said customer counts are down slightly -- less than 10 per cent -- from the same period a year earlier, but at this time of year the shortfall can easily be attributed to fluctuations in weather.

Wal-Mart has enjoyed healthier sales of hand sanitizer and paper facial masks, both associated with the SARS situation, he said.

"Retail sales right now for most retailers are not particularly buoyant," Mr. Pelletier added, saying that is often linked to the transition of seasons.

Still, some large retailers, including Loblaw Cos. Ltd., Sears Canada Inc. and Hudson's Bay Co., said they haven't seen any impact from the SARS scare.

"We're definitely going to watch this weekend, particularly in the Scarborough hospital area," said Rob Moore, spokesman for HBC, which owns the Bay, Zellers and Home Outfitters. "We'll look at the next four or five days, particularly the weekend."

HBC is providing stores with information on how to deal with customer and employee questions about the medical scare, he said.

Some smaller shops are feeling the squeeze. Kevin Golshani, owner of the three-store Fabric Fabric chain, said traffic dropped as much as 30 per cent in his west Toronto outlet over the past couple of days.

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