Back-to-school spending to increase 4.5 % in Canada

Generation Z is the new big disruptor in the retail industry, EY says

MONTREAL, July 20, 2016 /CNW/ - Back-to-school spending in Canada this year is set to increase 4.5% over last year, according to EY. Retailers will win their share of the spending pie by targeting not only parents who want to set their children up for success, but also Gen Z – the teens and tweens who are the first true digital natives.

"Canadian retail sales are off to a strong start in 2016, and we expect the trend to continue though the critical back to school season", says Daniel Baer, EY partner and National Retail and Consumer Products Leader. "Year over year lower gas prices, a stable but low Canadian dollar, some price inflation, and enhanced Canada Child Benefits are expected to drive back to school spending in most, but not all, parts of the country". 

The back-to-school sales forecast will varies by region. British Columbia will continue to lead retail sales, with strong results expected in Ontario as well. Sales in Quebec and the Atlantic provinces are expected to be in line with the national average, while the Prairies are expected to be below the national average.  Alberta sales are not expected to grow.

Economic factors are not the only ones influencing back-to-school sales. Gen Z's growing buying power is changing the game across the board.

According to a recent EY report, One tough customer: How Gen Z is challenging the competitive landscape and redefining omnichannel, the teens and tweens of Gen Z are driven, innovative and goal-oriented. They live online, and aren't afraid to share their opinions – and they demand similar transparency from the businesses they buy from.

"Retailers have always had to be responsive to what the customer wants," says Baer. "What has changed, though, is how, where and when they interact with them.  Retailers need to realize with a demographic with different attention spans, different desires, and different outlooks on the world.  Consumers today also crave experiences and solutions over products."

#startthemyoung

For retailers, back-to-school season provides the perfect opportunity to engage the younger generation, and capture new consumers.

While parents will generally still call the shots around things like supplies, Gen Z's influence on clothing and shoe purchases is set to increase.

Baer reminds retailers to invest in social media and mobile strategies: "Canadian retailers are still lagging foreign retailers around digital. But with a significant percentage of Canadian retail sales still made through foreign owned retailers, there's a real opportunity to catch up on that front".

Knowing that Gen Z lives out loud, Baer says having a platform for two-way communication is a must: "Younger generations don't trust advertising; they trust their friends and what they read online in blogs and peer reviews."

How can retailers get in front of consumers to engage them today?

In store. Online. On mobile. They're all important. Today, smartphones are the #1 source of information for consumers, but physical store remain the foundation. To truly engage with customers, retailers don't need new channels – they need new touch points.

"It's no longer about a channel strategy, but rather a customer strategy with a fully integrated approach," explains Baer. "Consumers, parents and children alike are doing their homework before they buy. They may not buy online or via mobile, but it's the first place they'll go to do their research. Retailers must deliver responsively, intuitively and seamlessly across all platforms."

Other highlights of EY's retail trends forecast include:

  • The speed of change and innovation will continue to accelerate.
  • With an increasing number of Canadians using social platforms such as Instagram and Pinterest, the digital experience is quickly moving from words to images.
  • The lower Canadian dollar will help keep sales on this side of the border.
  • Free shipping and delivery, as well as flexible return policies continue to be important for parents and Gen Z.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

For further information: Sasha Anopina, sasha.anopina@ca.ey.com, 416 943 2637; Julie Fournier, julie.fournier@ca.ey.com, 514 874 4308; Leigh Kjekstad, leigh.kjekstad@ca.ey.com, 604 648 3807

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