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

Drag queens help give Starbucks Canada video a jolt

The coffee chain is one of many brands targeting LGBT consumers

Subway and Disney team up for Big Hero 6 promotion

Twitter contest gives away tickets to advanced screenings across Canada

McCain’s new ad pushes versatility of fries – and fun

Creative showcases first major redesign for the company in more than 50 years

CMOs are being shut out when C-suites need them more than ever (Column)

Marketing has never been more important, but CMOs are often outside looking in

Following Shoppers Drug Mart’s dive into fresh

The retailer is adding fresh food to its offering. Is it just what consumers ordered?

Twist Image named digital AOR for Treasury Wine Estates

The WPP agency wins after a three-month, North America-wide review

Sport Chek goes grassroots with Toronto Raptors anthem

The retailer hits the court for the start of basketball season

O.B. tampons challenges women to ‘Give us one period’

Campaign aims to educate non-users and break down barriers to usage