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Holiday shoppers cautiously optimistic


November 11, 2010
By Amanda Ryder


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christmasshopNEWS HIGHLIGHT

Holiday shoppers
cautiously optimistic

Ernst & Young reports that even
without convincing signs of a strong economic recovery, consumers’
wallets will open slightly more widely for discretionary products than
last year.

Nov. 11, 2010 – Consumers and retailers have one thing in common this holiday
season: they both wish the thoughts of recession were behind them. But
even without convincing signs of a strong economic recovery, consumers’
wallets will open slightly more widely for discretionary products than
last year, Ernst & Young says.

“Uncertainty is still on
consumers’ minds, and confidence is not back at the level it was before
the recession, but the good news is that consumers are looking for the
fun factor and more exciting gifts,” says Daniel Baer, Ernst &
Young Partner and national retail industry leader.

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Four themes
will likely dominate this holiday season: consumer caution amid
attempts to repay debt; consumer skepticism of the long-term health of
the Canadian economy; consumer restraint and a lack of impulse buying;
and conflicted consumers, seeking some gratification after two
difficult holiday seasons.

While more traditional gifts, such as
gift cards, clothing and books, will still appear on many wish lists
this year, more consumers will be attracted by eReaders, electronics,
mobile data devices and even jewellery.

That being said, the
golden days are not expected by retailers anytime soon. Consumer
confidence in Canada fell for a fourth straight month in September;
strong competition is putting continuing pressure on retail prices, and
retail sales have dropped in four of the last five months.

Baer
adds, “The trends we have seen since 2008 are still a reality, but
there is some hope.” After two consecutive difficult holiday shopping
seasons, holiday 2010 sales are expected to increase in the range of 2%
to 3%, versus comparatively weak 2009 holiday sales.

Discount
chains, warehouse clubs and dollar stores will still have an important
share of holiday spending. Online spending will also continue to serve
the time-starved consumer well, with a number of retailers already
lowering minimum purchase amounts to obtain free shipping. And
consumers will increasingly use smartphone technology to do research
and comparison shop, forcing retailers to adapt to new technologies.

Holiday
spending will vary across Canada, with Quebec and British Columbia
outperforming the rest of Canada, and Alberta and Ontario in line with
the average increase.


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