Holiday spending expected to increase by 3.9%

October 13, 2011
Oct. 13, 2011 - Canadian retailers should brace themselves for a challenging holiday season, as consumers are expected to be more wary with spending while they pledge to pay down historically high debt levels. According to Colliers International's 2011 Fall Retail Forecast, December's retail sales are expected to reach $32.7 billion, a moderate 3.9 per cent increase compared to last year's $31.5 billion spent by Canadian households.

On an annual basis, Colliers' forecast, which is generated using a trend-based model comparing recent activity with historical patterns, pictures an even gloomier prediction. Total retail sales for 2011 is expected to slightly surpass $297 billion, a marginal one per cent year-over-year increase from $294.3 billion.

"With inflation taken into account, Canadian retailers are actually expected to see a slight drop in annual sales compared to the previous year according to our forecast," says Drew Keddy, Vice President of Canada and National Retail Leader with Colliers International. "Fears of another global recession and a strong loonie are only two of the reasons shoppers are more cautious about their spending and conscious about where they spend their dollars, often looking for bargains south of the border."

But while the national forecast suggests a challenging 2011 for Canadian retailers, on a regional breakdown, not all provinces are expected to perform the same. Spurred by strong local economic growth, Saskatchewan, PEI and Alberta (Alberta due to renewed activity in its oil sands) are expected to lead the pack in December with sales growth rates of 7.6 per cent, 4.9 per cent and 4.6 per cent respectively ($1 billion, $128 million and $4.3 billion).

At the other end of the spectrum, Nova Scotia, British Columbia and Quebec are expected to see a nominal drop in year-over-year consumer spending and a soft holiday season.

James Smerdon, Director, Retail and Strategic Planning with Colliers International in Canada, adds, "Canadian retailers are being challenged like never before as they have to deal both with a decline in shoppers' appetite as well as with the looming invasion of large-scale and powerful U.S.-based retail chains. There is no doubt that the next 12 to 24 months are going to be critical to the survival of some Canadian brands."

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