Ernst & Young is predicting back-to-school spending will be flat this year compared with last, compounding an already tough situation for Canadian retailers still reeling from a mediocre spring season brought on by poor weather.
Daniel Baer, Ernst & Young’s Canadian retail and wholesale industry leader, said in a press release that retailers are facing a number of “headwinds” during the crucial back-to-school season – the second most important on the retail calendar.
“The Canadian economy continues to grow slowly and consumer confidence remains fluid,” he said. “Although lower than their peak levels, higher gas and grocery bills have reduced consumers’ disposable income as inflation continues to outpace salary increases.”
According to Ernst & Young, price increases caused by higher commodity prices, including cotton, will also have an impact on spending.
Some good news for retailers, the firm stated, is that children’s items are usually the last thing parents cut, because they are viewed as necessities rather than luxuries.
Ernst & Young commented that consumers are heeding the calls to reduce household debt and are focused on value and price. They're also watching the dollar, with the high loonie in July fuelling traditional and online shopping in the United States, where back-to-school promotions started as early as July 1.
Baer advised retailers to use social media to promote loyalty programs.
“Today, participation in frequent shopper programs is not only about loyalty,” he said. “These days, it’s about immediate savings, not deferred points. Retailers need to know their customers well and must find ways to cater to them effectively.
Jenny Wagler
Twitter: JennyWagler_BIV