Softer back-to-school shopping season expected
TORONTO, Aug. 12 /CNW/ - The back-to-school blues could spread from
parents and students to Canadian retailers this year, with a soft
back-to-school shopping season likely, Ernst & Young says.
"Even though consumer confidence rose for the fifth straight month in
July, it's still only just back to the level we hit this time last year,"
explains Daniel Baer, Ernst & Young's National Retail Industry Leader. "The
stock markets may have recovered from their 2009 lows, but people are still
worried about salaries, debt levels, and damaged bottom lines. That quashes
Much like the 2008 holiday shopping season, retailers that promote
'more-for-your-dollar' value will garner the lion's share of this year's
back-to-school sales. Baer cites discounters, value retailers, supercentres
and dollar stores as the would-be winners in this environment.
"Children's items are usually the last area parents cut," explains Baer.
"Many will likely find a middle ground, picking up essentials like books and
school supplies. But they'll tend to spend less on discretionary items like
clothing and accessories."
Baer says Canadian retailers will have an easier time than their
counterparts in the US, where economic fundamentals are weaker. "Canadian
retailers have reacted prudently, and managed inventories well over that last
18 months. They're also price competitive, and that's dampened cross-border
Results across Canada will be mixed, with Quebec showing strength and
Ontario, British Columbia and Alberta expected to show weaker results.
In fact, Baer says retailers that seize this opportunity to improve their
bottom line could emerge ahead of the pack when the recovery phase begins.
"Retailers should focus on continuing to manage their costs, improving working
capital, and investing in the right type of innovation."
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