Shopping season starts earlier in an increasingly competitive market
MONTREAL, July 30, 2012 /CNW Telbec/ - Back-to-school spending is set to
climb only 2.5% over last year in Canada despite the early start to the
shopping season, according to Ernst & Young.
"Back-to-school sales started on July 1 south of the border, stimulating
demand and forcing Canadian retailers to follow suit and get in step
earlier than ever," explains Daniel Baer, Ernst & Young Partner and
National Retail Industry Leader. "Consumers' low confidence level means
they are careful, looking for bargains despite brand loyalty, and
aren't hesitant to compare prices before buying, whether shopping in
stores or online from home or by mobile."
Baer adds that retailers understand that every dollar spent at the
competition is a dollar less in consumers' budgets that could be spent
in their stores. On the other hand, most back-to-school purchases are
Aside from the growing trend to shop online for low US retail prices,
cross-border competition is also being stimulated by new traveller
exemptions, allowing Canadian residents to import products without duty
or taxes. As of June 1, traveller exemption limits increased from $50
to $200 for visits of at least 24 hours, and from $400 to $800 for
visits of at least 48 hours.
Losing ground to US retailers isn't the only challenge facing Canadian
consumer products companies. According to a recent global publication
by Ernst & Young, Disrupt or be disrupted: creating value in the consumer products brand
new order, 74% of consumer products company leaders believe they need to make
significant changes to sustain historic margins. The survey also shows
that 68% of responders are under pressure to reappraise their operating
Baer says, "The consumer landscape is in constant evolution, both here
and around the globe. Canadian retailers aren't immune to worldwide
trends. Thanks to technology and new modes of communication, consumers
are taking control of the conversation and demanding better value."
Back-to-school sales are not limited to traditional items like clothing,
shoes and stationery. A growing number of increasingly younger students
purchase electronic items and devices. Baer adds this sector will
likely perform very well this year.
Baer expects that back-to-school spending will vary across Canadian
regions, mirroring 2011 trends: Alberta and Saskatchewan will continue
to lead, and spending in Québec and Ontario will be below the national
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SOURCE: ERNST & YOUNG
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