Retailers have new hope
Last year’s sales saw big increase compared to 2016, including rise in popularity of Black Friday deals
Strong retail sales in November and December could signal a healthy year ahead — but not quite as good as 2017, experts say.
“The economy is good and people I think are generally feeling optimistic,” said Maureen Atkinson, a partner at J.C. Williams Group, global retail advisers.
“We think 2018 is going to be good, but not as good as last year. It is hard to maintain that kind of momentum, unless something exceptional happens.”
While the monthly rise in adjusted retail sales recorded by Statistics Canada between October and November was smaller than hoped — just 0.2 per cent — year-over-year sales told a different story.
Total retail trade was up 6.5 per cent in November over November 2016, with some categories regis- tering whopping increases.
Seasonally adjusted sales at electronics and appliance stores were up 23.4 per cent in November over the same month a year ago.
Areport from the National Bank of Canada pointed to a rise in the popularity of Black Friday sales and the release of a popular new phone as the factors in that increase.
Sales in November were also up 9 per cent at jewelry, luggage and leather goods stores over November 2016 and clothing stores registered a 5.7-per-cent increase in sales.
Retail consultant Ed Strapagiel is expecting that December retail sales will be in line with retail sales in 2017 — up, but perhaps not as much.
“We’ve done quite well in retail, and when you hit a high it’s unlikely to continue,” Strapagiel said.
He said November’s 9.8-per-cent increase in general merchandise sales — the kind of wares found at Sears Canada, which was in liquidation mode over the holidays — were up all of 2017, meaning the bump in November wasn’t due exclusively to consumers taking advantage of deep discounts as the department store chain went out of business.
Strapagiel pointed to high employment as one of the reasons for increased retail sales and interest rates, which despite recent increases remain at historic lows.
Possible drags on consumer spending in 2018 include the outcome of NAFTA negotiations and interest rates — there have been predictions of as many as three rate increases in 2018, Strapagiel said.
Some retailers have already signalled robust holiday seasons, including Nordstrom Inc. and Lululemon Athletica Inc., which in early January announced it was raising its profit and revenue forecasts for the fourth quarter.
Sales were up 20 per cent at Yorkdale mall and traffic was up 11 per cent during the holiday season, according to a spokesperson.
Diane Brisebois, president and chief executive officer of the Retail Council of Canada (RCC) said retail sales for the year and over the holidays were up close to 5 per cent, as forecasted by the RCC and payment processing company Moneris Solutions Corp.
The RCC is working on projections for 2018, but there are many unknowns to consider, including NAFTA, interest rates and elections in Ontario, Atlantic Canada and Quebec.
“We usually wait to see what happens in the first quarter,” Brisebois said. “We are tentatively projecting a 4-per-cent increase.”
Holiday data revealed a growing trend: Black Friday is eclipsing Boxing Day. RedFlagDeals.com recorded a 5-per-cent increase in traffic for Black Friday in 2017 over 2016, but only a 1-per-cent increase in traffic for Boxing Day.
Research from Moneris found that Boxing Day spending grew nearly 9 per cent year over year and Black Friday spending was up 4.5 per cent, but overall spending was 45 per cent lower on Boxing Day versus Black Friday.
According to data collected in late November by Canadian retail advisers DIG360 and market research and polling firm Leger, a full third of Canadians decided to postpone fall purchases in anticipation of Black Friday promotions.
The Leger data found that Black Friday is approaching Boxing Day in terms of popularity in Canada: 17 per cent of Canadians bought on Black Friday this year, while 22 per cent reported they bought items on Dec. 26, 2016.
But researchers also warned that satisfaction with Black Friday deals declined slightly in 2016, with consumers reporting that deals seemed less attractive.
“It seems Canadians are learning that retailers are not blowing out their stock this early in the season and this could lead to a pull-back in participation in future years,” according to the report.