Retailers hoping for back-to-school boost after weaker sales
Canadian consumers are expected to spend more in the back-to-school season but the most recent data shows that most retail subsectors saw weaker sales in June.
Statistics Canada says that retail sales were down 0.2% in June compared to May (up 2.2%) as sales at gasoline stations and motor vehicle parts and dealers slipped. Without these sectors, sales were up 0.3%.
The $50.7 billion total was impacted by lower sales in 6 of the 11 retail subsectors.
On a quarterly basis, retail sales were up 1.0% in the second quarter following a 0.5% decrease in the first quarter. In volume terms, retail sales increased 0.9% in the second quarter.
Back-to-school spending to increase
One sector of retail trade is expected to see strong performance in the lead up to the new school year.
Back-to-school spending is forecast to grow around 4% over last year according to EY.
"Canadian retail sales are off to a strong start in 2018, and we expect the trend to continue through the back-to-school season," says Ted Salter, EY Canada Consumer Products and Retail Leader. "A confident consumer, strong employment, population growth and a low but stable Canadian dollar are all expected to drive spending across the country, with few exceptions."
Its analysis calls for notably strong growth in the sector for British Columbia, with above average results for Ontario and Quebec. Sales in Alberta are expected to be in line with the national average, while the other Prairie provinces and Atlantic region will likely be below the national average.
"As parents focus on their children's education, concerns over NAFTA, tariff and geopolitical uncertainty are not expected to influence consumer spending in the short term," says Daniel Baer, EY Canada Consumer Products and Retail Assurance Leader. "That doesn't mean consumer expectations aren't changing. The path to purchase continues to evolve, and retailers will need to keep up by being cognizant of how consumers make their buying decisions."
