Canadian back-to-school spending stagnant, says EY

Aggressive retail strategies should extend selling season into September

MONTREAL, Aug. 5, 2014 /CNW/ - According to EY, Canadians won't be rushing to spend on back-to-school items this year. The firm projects sales of traditional items such as clothing, shoes and stationary to be flat compared to 2013. This is in sharp contrast to the 3.7% growth just a year earlier, when the retail industry saw its highest growth since the financial crisis.

"The stage is set for an overall sluggish back-to-school season" says Daniel Baer, EY Partner and Canadian Retail and Consumer Products Sector Leader. "Higher food and gas prices, inflation and investment in new homes are leaving consumers with fewer dollars to spend on clothing and other traditional back-to-school items."

Instead, Baer says savvy consumers are searching for lower pricing and conducting more online research about items before they buy.

"Retailers continue early promotions, fighting for every consumer dollar," says Baer. "But consumers will likely wait for further promotions, extending the back-to-school season into early September, after the start of the school year."

"In a competitive economy, retailers need to compete on more than just price," adds Baer.

Aggressive strategies such as e-commerce promotions, pop-up stores, limited time collaborations, exclusive targeted events and smaller, more curated collections are all becoming important differentiators in the retail space. Meanwhile, promotions at discount, department, pharmacy and dollar stores are already in full swing, fighting to attract budget-conscious back-to-school shoppers.

Alberta, Saskatchewan and British Columbia are expected to lead retail sales through the back-to-school season, with Quebec and Ontario closer to average expectations and the Maritimes lagging the national average.

Other highlights of EY's back-to-school retail trends forecast include:

  • Interest in electronics, computers and tablets is expected to flat line this year
  • Consumers overall are using mobile technology to research and buy more than ever before
  • Consumers – particularly those younger than 25 – are more inclined to reuse and recycle and are, accordingly, spending less

"Consumers seem to be less inclined to spend this back-to-school season," says Baer. "With retailers still aggressively courting shoppers, we expect the selling season to be uneven."

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SOURCE EY (Ernst & Young)

For further information: Erika Bennett, erika.bennett@ca.ey.com, 416 943 5497; Sarah Shields, sarah.j.shields@ca.ey.com, 604 648 3607; Julie Fournier, julie.fournier@ca.ey.com, 514 874 4308