Holiday sales forecast to grow modestly in Canada
MONTREAL, Nov. 1, 2011 /CNW Telbec/ - As market volatility and economic
uncertainty continue to make headlines, retailers are facing major
obstacles going into the critical holiday shopping season, Ernst &
With consumer confidence shaky, shoppers will tend to err on the side of
caution, focusing on necessities and stretching dollars to cover the
rising costs of commodities.
"Cautious and conservative consumers tend to focus on price and, in
particular, price integrity," says Daniel Baer, Ernst & Young Partner
and national retail industry leader. "Successful retailers will not
only match their prices with their competitors, but need to ensure they
offer the same prices in all channels — in store, online and cross
This holiday season more than ever, Canadian retailers will compete in a
heavily promotional and highly competitive market. Price guarantees, price matching, free delivery, price checking and promotional pricing will all be popular terms.
"Consumers have been stressed since last August — in particular dealing
with uncertainties created by a roller-coaster market," explains Baer.
"Even if Canada compares well to other countries, uncertainties around
the globe are worrying shoppers here and affecting their behaviour.
Consumers are focusing on debt, be it European or their personal debt
Accordingly, Ernst & Young is forecasting that holiday sales will grow
by a modest 2%, in line with core inflation, compared to last year.
"While Canadian retail sales might appear to be growing more slowly
than in the US, it's important to remember that sales never fell quite
as sharply here as they did south of the border," adds Baer.
Rising inflation — close to 3.2% on commodity and gas prices — is also
restricting consumers' spending power as wages grow more slowly.
Consequently, dollar stores, discount chains and warehouse clubs should
grow their share of holiday spending.
Consumer trends will vary across Canada, with Alberta and the Prairies
leading, Ontario and Atlantic Canada in line with the average, and
British Colombia and Quebec lagging behind.
In terms of product popularity, clothing stores and electronics
retailers should enjoy a fair piece of the spending pie. "It looks like
tablets and smartphones are no longer considered discretionary items
but, rather, necessities," notes Baer.
As for gift cards, while they will still be popular this year, the
market is maturing, and sales are expected to be flat compared to last
year. Online spending, including cross-border online spending, will
continue to increase.
Baer says Canadian retailers have already reacted and adjusted to the
consumer's cautious mood, and are themselves acting carefully.
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