More troubles ahead for Canadian retailers: report

Canadian retail sales were up 4% in the first six months of 2012—comparable to 3.8% growth for the corresponding period in 2011—but a new report from Toronto consulting firm KubasPrimedia suggests there are some warning signs on the horizon. While the first quarter produced a 5.6% increase in sales over the corresponding year-earlier period, second […]

Canadian retail sales were up 4% in the first six months of 2012—comparable to 3.8% growth for the corresponding period in 2011—but a new report from Toronto consulting firm KubasPrimedia suggests there are some warning signs on the horizon.

While the first quarter produced a 5.6% increase in sales over the corresponding year-earlier period, second quarter sales increased just 2.8%—one of the worst quarterly increases since the end of the recession.

That downward trend is exacerbated by lowered expectations for Canadian GDP (which grew just 1.9% in Q1 and 1.8% in Q2) and a faltering U.S. economy that saw Q2 GDP growth projections revised downward to just 1.7%.

In addition, new duty-free shopping limits introduced in June—which raised the duty-free limit on U.S. visits of more than 24 hours to $200 from $50 and the limit on visits longer than 48 hours from $400 to $800—are also expected to adversely affect Canadian retail sales, said Kubas.

According to a recent report from Statistics Canada, Canadians residents took nearly 2.8 million overnight trips abroad in June. That represented a 5.7% increase over the previous month, and is the highest monthly figure since record keeping began in 1972.

“There are no accurate numbers on how much this impacts Canadian retail sales, but in a slow growth environment, every lost dollar hurts,” said the report.

KubasPrimedia is calling for a 3.7% increase in retail sales for the second half of 2012, and is calling for “more of the same” in 2013, saying there is nothing in the forward outlook to suggest an imminent increase in retail activity.

KubasPrimedia is calling for total location-based retail sales to hit $473.8 billion in 2012, up from $456.4 billion in 2011. It is calling for retail sales to hit $492.6 billion in 2013.

Some retail sectors are projected to outpace average industry growth, however. Specialty food stores, for example, are projected to see sales growth of 5.4% to $5.3 billion this year, while sales for clothing stores are projected to increase 6.3% to $21.5 billion and sales for general merchandise stores are projected to increase 5.2% to $59.7 billion.

The booming Alberta and Saskatchewan markets will see the greatest increases in retail sales in 2013 said KubasPrimedia, growing 8.2% and 7.2% respectively. Ontario is by far the country’s largest retail market, with projected sales of $166.1 billion this year, followed by Quebec with projected sales of $104.5 billion.

KubasPrimedia suggests marketing issues will be “more of a concern” for retailers in 2013, especially with increased competition from mass merchandisers like Target. Retailers will also need to address issues including “omni-channel” marketing, “showrooming” and mobile payment systems it added.

Brands Articles

Pressboard ranks the best of brand content partnerships

10 publisher/brand collaborations worth studying

Porsche sells Canada its Macan by celebrating bicycles

Online short films focus on those who represent Porsche brand attributes

Uber’s marketing must mature to live up to $18 billion

The tech bubble taught us to watch out for marketing this dorky

Searchlight Capital buys M&M Meat Shops

Private equity firm gets into frozen foods

Aeroplan: 30 years of loyalty

SPONSORED CONTENT: Aeroplan's Chris Willoughby

Staples puts price at the heart of back-to-school campaign

Going up against Walmart and Target with its biggest campaign of the year

Kraft searches for Canada’s Ultimate Food Hacker

Contest winner will receive $25,000 and opportunity to create new recipes

VOCAB ready to raise funds for African orphanage

Meet Me in Africa will tackle one key project a year

Schick bids young men to think more about their shave routine

'Don't be like dad' is the message behind a new integrated campaign