Canadian holiday retail sales expected to grow 3.3%: EY

Competitive landscape and price-sensitive consumers to restrain holiday spending

TORONTO, Oct. 30, 2014 /CNW/ - Canadian holiday retail sales are expected to grow 3.3%, over the comparatively weak 2013 holiday season, EY says.

"Retail sales were consistent in their inconsistency so far this year," says Daniel Baer, EY partner and National Retail and Consumer Products Industry Leader. "There was never any strong momentum, either upwards or downwards. While consumer confidence is stronger and gas prices are lower, consumers continue to be constrained by increasing debt loads and increasing mortgage payments, and so a focus on price and value will continue." 

Another continuing trend is the "Americanization" of Canadian retail. Although a weaker US dollar should discourage cross-border shopping, the influence of US retailers, US web sites and shopping events like Black Friday will have a significant impact on Canadian shopping habits.

The 2014 holidays sales forecast throughout Canada is expected to be uneven, with the following trends:

• Alberta and British Columbia will continue to show the strongest sales results.
• Results in Manitoba and Saskatchewan will trail their 2013 results, as GDP growth weakens.
• Ontario sales gain will mirror the national average, as employment strengthens.
• Sales in Atlantic Canada will lag all other provinces.
• Quebec sales will be soft as consumer confidence reacts to restrained government spending.

In terms of product popularity, the classics such as clothing, toys, electronics and jewelry should lead. New product releases for smart phones will help drive traffic, which will in turn drive higher volume in this category. Gift cards will maintain their popularity as a convenient and simple gift.

As always, weather can play a negative role in holiday spending, particularly in December. Concerns about safety in public areas could also play a role in shoppers turning to online shopping instead of venturing out to the mall. 

Retailers will need to focus on a positive consumer experience if they want their share of the pie. In fact, 2014 will be the year of "collaboration." This means that, more than ever, retailers will have to team with various partners – including their consumer-product suppliers, real estate partners, technology and media providers – if they want to succeed and thrive.

Baer explains: "Retailers will need their suppliers to provide exclusive products; their real estate providers to provide a compelling, fun, convenient and entertaining environment; attention grabbing media; and seamless technology available on tablets, smartphones or desktop."

For example, retailers should invest in better mobile-enabled technology and enhanced websites for tablet users. They should also consider a significant shift in spending to digital advertising and social media.

Retailers should also consider more traditional strategies such as:

• price matching
• flexible returns
• deep discounts coinciding with American Black Friday promotions
• better omni-channel delivery, including free and fast shipping
• more curated collections

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.

EY is proudly celebrating 150 years in Canada. 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)

Erika Bennett, [email protected], 416 943 5497; Sarah Shields, [email protected], 604 648 3607; Julie Fournier, [email protected], 514 874 4308