Holiday sales expected to rise 3.5% in Canada

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(Toronto, 30 October 2012) Supported by signs of improvement in consumers’ confidence, 2012 holiday retail sales in Canada are expected to increase by 3.5% over last year, according to EY.

“Halloween has not even passed, and it’s already beginning to look a lot like Christmas in Canadian retail stores,” says Daniel Baer, EY Partner and National Retail and Consumer Products Industry Leader. “With moderately strong back-to-school sales this year — in part because of an early start to the shopping season — retailers should continue to benefit from a positive, if unexciting, sales trend.”

Retailers, however, are challenged by consumers’ concerns about their personal debt levels and the general state of the Canadian and US economies. Consumers remain conservative and focused on price. Retailers will continue to compete intensively on price, as they attempt to battle each other in stores and online. In turn, retailers will strive for exclusivity in product selection, leading to more private label being stocked.

This holiday season will also be characterized by the continuing “Americanization” of the Canadian retail market, on multiple levels. “US promotions, coupled with more same-day shopping trips, and more US competitors will result in Canadian retailers leveraging their Canadian heritage and matching their promotions to the US retail calendar,” explains Baer. 

In this competitive environment, being proactive and using all the tools available to secure each and every sale will be key for retailers. “Serving clients through multi-channel is a concept of the past,” says Baer.  “Today, we're seeing an omni-channel trend. That means retailers are using all available channels to connect with consumers and meet their needs, on their terms.”

The omni-channel trend will support this year’s online sales growth, along with social and mobile sales. “Having the right products at the right price is still very important in this economy, but using the right medium to not only connect, but sell, will give retailers the edge to compete,” notes Baer. Leading edge retailers will continue to:

  • Adapt their mobile graphics and platforms to ease the mobile shopping experience
  • Invest to integrate store and online platforms
  • Enhance their online selection
  • Use social media to reach out, engage and excite tepid consumers — younger shoppers will increasingly rely on social reviews in their buying decisions

Consumer trends will vary across Canada, with Alberta and the Prairies expected to lead, Ontario and Atlantic Canada in line with the average, and British Colombia and Quebec lagging behind.
In terms of product popularity, clothing stores and electronics retailers should enjoy a fair piece of the spending pie, as will retailers who sell gaming consoles. Recent new product releases for tablets and smart phones will help drive traffic, “as these categories are no longer considered discretionary items but, rather, necessities,” notes Baer.
While gift cards will still be popular this year, the market is maturing, and sales are expected to be flat for a second year in a row.

 

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