Early indications suggest Canadian retailers saw no sales growth this holiday shopping season as consumers focused on their finances rather than the urge to splurge.
Major retailers are reporting flat Christmas sales this year and low turnouts for Boxing Day shopping, according to retail consultant Jim Danahy of CustomerLAB, which works with companies in all categories including drug, department, food and specialty stores.
“If anything (this year’s sales) will be a little bit on the disappointing side because we’re not seeing the crowds in the stores,” Danahy said.
In the U.S., retailers reported holiday sales rose 3.3 per cent, a solid increase, but still behind last year’s 3.8 per cent pace.
As well, U.S. merchants also had to mark down merchandise to get shoppers to buy in the face of a challenging economy, which resulted in a string of retailers reducing their earnings outlooks.
Canadian retailers did not discount to the degree their U.S. counterparts did and instead operated with reduced inventories to avoid the risk of being left with piles of unsold stock, Danahy said.
Retailers north of the border most likely saw flat margins and flat dollar-for-dollar sales compared with a year ago, he added.
“There was no opportunity for wow,” he said.
“Even if customers had surprised retailers by coming out in droves — and they didn’t — there was no chance of having a bumper crop this year because inventories were held low.”
Holiday shopping sales at clothing chain Reitmans (Canada) Ltd. (TSX:RET), which also owns chains like Smart Set and RW& Co., saw December sales fall 0.1 per cent.
Reitmans also said same-store sales dropped 0.4 per cent, suggesting that the key Christmas shopping season was affected by consumer caution.
Danahy calls the preliminary holiday shopping season results disappointing, but not surprising, given dismal consumer confidence and high household debt.
“People have realized ’I don’t have the cap room to buy more and maybe I better grow up’.”
Some retailers attempted to introduce Black Friday, but it was a flop and even has Boxing Day waned as big shopping event, he added.
However, Danahy noted there is still time for sales to improve due to an extended shopping season this year as schools are closed this week and many government and bank employees were still on holiday.
Many Canadian retailers contacted, including clothing retailers Jacob, Le Chateau (TSX:CTU.A) and Lululemon (TSX:LLL), as well as Canadian Tire (TSX:CTC), Sears Canada (TSX:SCC) and Indigo Books and Music (TSX:IDG), did not immediately return calls seeking comment Thursday.
Canadian payment processor Moneris will release its final portrait of how much consumers spent through their machines next week. But its earlier assessment suggested sales between Nov. 25 and Dec. 19 were up nearly five per cent from the period in 2010.
However, that doesn’t necessarily indicate Canadians were shopping more this year, just earlier.
Predictions going into the period had indicated that feelings of financial insecurity could overwhelm the Christmas giving spirit, pressuring Canadians to be more frugal holiday shoppers this season.
A survey by Deloitte Canada in November predicted spending would grow by a modest two per cent over last year, mostly due to higher prices in line with inflation.
A report by OTX and Google also found Canadians planned to spend $711 on gifts this year, down from $728 last holiday season.
And a Bank of Montreal study predicted in October that Canadian retail sales would be up about 2.5 per cent in November and December, compared with a gain of 3.1 per cent in last year’s holiday season.