It was almost Christmas in July for retailers in B.C. and across the country.
Last week, retailers came as close as they’ve ever been to realizing their goal of changing how the country’s largest credit card providers charge credit card fees.
For years, retailers had been complaining that they were shouldering the burden of unpredictable and “excessive” fees associated with giving customers the option to pay using the plethora of credit cards available in Canada (See “B.C. merchants weary of shouldering credit card fees – BIV issue 1143, September 20-26, 2011). According to the Retail Council of Canada, credit card acceptance costs the industry $6 billion in fees per year.
But their hopes were dashed July 23 when the Competition Tribunal dismissed the case launched by the Competition Bureau in 2010 on behalf of the country’s beleaguered retailers.
Such disappointing news for the country’s merchants was slightly offset by Statistics Canada data that showed national retail sales increased 1.9% in May and 3.6% year over year to $40.4 billion on a seasonally adjusted basis.
But B.C. retailers, on the whole, didn’t share much of that growth. Sales rose only 0.4% in May and were flat year over year. Only the country’s three territories had worse results than B.C.
For the past year and a half, monthly retail sales have hovered under $5.2 billion. This disappointing trend has led to sub-par longer term sales growth. Total sales in B.C. rose 1.9% in 2012 to $61.6 billion from $60.4 billion in 2011. That’s below expectations of many economists and off the national average increase of 2.5% and far lower than the 6.8% increase in Alberta in the same period.
Whether the prevalence of cross-border shopping or belt-tightening by B.C. consumers are key causes of lacklustre sales growth, the trend is hurting local mom-and-pop retailers.
According to Statistics Canada, the number of non-chain retail stores fell 10% between 2008 and 2011. Those have essentially been replaced by chain stores, the number of which have risen 9% in the same period.
Local retailers certainly have it tough, especially with razor-thin profit margins potentially at risk from variable monthly credit card charges. Some retailers are doing painfully worse than expected.
More on this next week. •
