Changing Canadian economy presents new challenges
TORONTO, Aug. 11 /CNW/ - As the familiar back-to-school groans echo
through households nationwide, Canada's retailers are gearing up for the
back-to-school shopping season. But with softer economic conditions than in
2007 and rising inflation, particularly for gas and food, parents are eyeing
price tags more closely than in the past.
"Markets have been showing signs of stress in the past few months,"
explains Daniel Baer, Ernst & Young's Canadian retail and wholesale industry
leader. "In one sense, all retailers are feeling the pinch. As consumers
continue to seek value and convenience, retailers who sell discretionary goods
will need to refine their strategies this year."
Retailers who are successful will recognize the importance of
collaborative efforts with their consumer products suppliers, and will adjust
to an environment where consumers:
- Are less confident than last year.
- Continue to seek value to offset decreases in discretionary income.
- Are time starved and looking for a shopping experience that will
allow more leisure time and less stress. Given high gas prices,
consumers want to make fewer trips to shop.
- Are skeptical about whether retailers are passing along the benefits
of higher Canadian dollar.
- Want their purchases to reflect their social responsibilities and
Key strategies to cope with this new environment:
1. Use innovative packaging, which reduces environmental (boxes,
plastic, etc.) and shipping costs (less weight uses less fuel).
2. Focus on innovation. Companies that spent more on innovation during a
downturn saw return on capital employed rise during the recovery
3. Ensure logistics between the retailer and consumer product
manufacturer are in sync.
4. Accelerate the benefits of cost-reduction programs. To cope with the
economic slowdown, some companies have already undertaken
5. Ensure the brand offering is consistent across all sales channels.
Interested in learning more? Ernst & Young can share insight on what the
economic slowdown means for Canadian businesses in the retail industry, and
expand on the tips outlined here.
About Ernst & Young
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