B.C. retailers are grappling with sales growth that is a fraction of what it was years ago while simultaneously watching margins get squeezed by high credit card commissions.
“Many retailers would be happy with a growth rate of 2%, 3% or 4% in sales year over year,” said Mark Startup, who is the CEO of Shelfspace: The Association for Retail Entrepreneurs.
“That compares with the period before the economic meltdown when retailers would have been looking for between 5% and 10% sales growth.”
Some product categories have seen growth in that range.
Moneris Solutions Canada revealed data on Tuesday for the five-week period ending December 19 which showed apparel sales volume grow 5.08% compared to a 5.06% decline in overall sales in department stores.
Entertainment was another huge sales growth category.
Moneris, which is a payment processing company, charted entertainment spending during that time as being up 13% compared to the same weeks a year ago.
Startup said retailers are being squeezed even if sales are up on average. That is because payment processing costs are taking a bigger bite out of margins.
“The most significant issue for merchants is the premium cards that credit card companies have introduced. They result in a higher transaction rate at the retailers’ point of sale.
“At a time when margins are being squeezed, there are merchants going through the first contraction in the economy that they’ve ever experienced and they need to figure out how to be profitable on no growth or no growth in sales or, in some cases, a decline in total sales.”