Retail sales expected to rise marginally in the new year as buying power
TORONTO, Jan. 19, 2012 /CNW Telbec/ - Canadian retailers will have no
time to enjoy the post-holiday season, as 2011 challenges spill into
2012. Retailers face numerous challenges, including an influx of
foreign competitors, weak consumer sentiment and decreased consumer
buying power, says Ernst & Young.
"National holiday sales to date increased approximately 2% in 2011, in
line with expectations," says Daniel Baer, Ernst & Young Partner and
National Retail Industry Leader. "Consumers will continue to focus
squarely on price in 2012. Retail sales are expected to rise
marginally. Meanwhile, higher gas prices, taxes and costs for groceries
and certain manufactured goods will further erode buying power and
combine to squeeze retailers' bottom lines."
Retailers will also need to contend with the ripple effects of new US
competition in the Canadian market. As Canadian retailers continue to
reel from the entrance of numerous US companies in 2010 and 2011,
they'll need to focus on differentiating themselves. We're likely to
see more patriotic "buy Canadian" marketing in the year ahead.
"In 2011, Black Friday and Cyber Monday events were much more common
among Canadian retailers, demonstrating the impact of US marketing in
Canada," explains Baer. "Expect Canadian retailers to emulate their US
brethren in 2012, particularly through the adoption of social media,
more aggressive online strategies and international expansion."
What's more, many Canadian retailers will look beyond the country for
growth opportunities. Baer explains: "a number of Canadian retailers
have been very successful in the US and in other countries around the
world, and these success stories will be examples to other Canadian
retailers looking for a competitive advantage."
Additional trends to watch in 2012:
Online shopping: This distribution channel, especially used from mobile devices, will
continue to influence the retail landscape, and retailers will continue
to sharpen their online offering.
Logistics and delivery policies: Everything from ease of use to delivery charges will be challenged.
Long term, retailers will reconsider their physical store strategies in
light of increasing online sales.
Social media: The use of social media will increasingly influence how, when and where
Real estate and talent: As US retailers continue to enter the Canadian market, retailers will
be pressured on real estate and talent.
Consolidation and restructuring: While the Canadian marketplace saw a number of retailers go out of
business in 2011, consolidation and restructuring will become more
commonplace in 2012. Some retailers are weakened by the recession and
will need to restructure or to sell.
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