Some retailers might be in for a “rude awakening” come the holiday season, according to a new analysis by consultant Ed Strapagiel.
Based on the most recent data from Statistics Canada, total Canadian retail sales were up only 1.4% year-over-year as of August and just 2% for the first eight months of the year, compared with 4.6% over the same period last year. Strapagiel attributes that mainly to significantly lower gas station prices, although he points out that other sectors are also “losing steam.” Grocery stores had a particularly rough August and sales seem to have plateaued for food and drug.
Combined with lower-than-expected GDP growth and the low dollar, retailers are facing a challenging environment.
“It now appears that retail sales growth is past its peak and is moderating just in time for Christmas,” Strapagiel writes.
“Christmas sales have already started and things are shaping up to be a drawn-out, margin-squeezing, profit-shaking competitive battle,” he says. “Retailers who ordered their holiday stock on the basis of strong numbers in Q1 might get a rude awakening in Q4.”
Still, home furnishing stores, shoe stores, and jewellery, luggage and leather goods stores all had above average sales gains, according to the data.
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