Since the financial crisis, B.C. consumers haven't been splurging.
According to data from Statistics Canada's annual retail trade report, sales in B.C. have fallen in six of the 11 different subsectors in B.C. between 2008 and 2011.
Food, clothing and general merchandise retailers have seen the bulk of consumer spending increases in B.C., offsetting the muted spending for nearly every other retail subsector. That fiscal belt-tightening has eroded the profitability of shop owners selling some of the most discretionary goods in the market.
For example, operating profits have fallen:
•36% for B.C. home furnishing stores, compared with a national profit increase of 10.2%;
•26.4% for B.C. shoe retailers, compared with a 19.4% drop in Canada;
•17% for jewelry, luggage and leather goods stores in B.C., compared with a 10.4% decline nationally; and
•9% for B.C. electronics retailers, compared with a 4.5% gain across the country.
For some of these retail subsectors, the local storeowner is bearing the bulk of the profit declines.
Non-chain home furnishing stores, for example, have seen profits fall to 1.8% in 2011 from 6.6% in 2008. Meanwhile, profits from chain stores have risen to 7.6% from 4.9% over the same period.
Non-chain electronic retailers have seen profits disappear with a reported average loss of 0.5% in 2011 from a 5.5% operating profit in 2008. Chain stores have seen their profits edge up in B.C. to 6.3% from 5.6%.
Niche B.C.-based jewelry stores and shoe retailers are among the few non-chain stores seeing profits edge up compared to earning declines by their larger competitors.
Overall, muted retail sales in B.C. for the past year and a half haven't improved the situation, despite improving consumer confidence, according to the Conference Board of Canada's index. But with B.C. having the most confident consumers in July, a splurge may be coming. The conference board noted 47.4% of consumers nationally said it was a good time to make a purchase – 8.4 percentage points more than in January. Much of the increased spending intentions came from B.C., with a large number of respondents saying they were now prepared to make a major purchase, something fewer B.C. residents have said in the past. •
