Experts expect big back to school season

Retail experts are forecasting an increase in Canadian back-to-school spending this summer thanks in part to the low loonie and the new Canada Child Benefit.

Business consulting firm EY, formerly Ernst and Young, predicts retailers will see a 4.5 per cent increase this year over 2015 sales as students stock up for another year in the classroom.

EY’s forecast is based on factors that include province-by-province employment numbers, housing markets and consumer spending habits over the past 12 to 18 months, said EY’s Daniel Baer in a recent interview.

EY also asked retailers across the country for their own sales trends and expectations.

Back to school is the second-biggest shopping season after Christmas, Baer said.

“What we’ve been seeing is stronger retail sales for a few reasons,” Baer said. “The Canadian economy has been relatively strong (and) there’s been some more government spending in terms of child-care benefits … putting money into the hands of families.”

This year, Prime Minister Justin Trudeau replaced existing child-care benefits with a program that will see the average family get $2,300 per year. The new Canada Child Benefit is expected to push tens of thousands of Canadian children above the poverty line, and could help stimulate the economy.

The weak loonie has also encouraged more Canadians to shop on this side of the border instead of going to the U.S. to stock up on supplies or buying from American online retailers, Baer said. And a number of Americans are travelling north to shop to take advantage of the exchange rate, giving a further shot in the arm to the Canadian economy.

EY doesn’t expect all provinces to reap the rewards of increased backto-school spending.

The struggling oil-andgas industry and rising unemployment in the Prairies point to lower spending, especially in Alberta, Baer said.

But Alan Middleton, a marketing professor at York University’s Schulich School of Business, said back-to-school spending is relatively immune to a weak economy.

“They may not get the top-of-the-line laptop … if (they are) under economic threat, but there’s still going to be a whole bunch of other stuff they’re (buying),” he said.

Electronics stores might see fewer people shopping for new tablets or laptops, but big-box retailers like Walmart will still sell the same number of essential items, Middleton said.

“Clothing, uniforms, paper, crayons, the whole caboodle is really quite economy-insensitive,” he said. “People have to buy them.”