Canadian retail landscape

Canadian retail landscape

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Canadian retail landscape still in flux as stores prepare for Christmas

Cathy MacInnis, President of the Canadian Federation of Independent Business, shares a moment with Canadian Consul General in Sydney, Robert MacGregor after delivering the “Building Canadian Exports and Jobs” address in Sydney today. (Natalie Holdway photo)

In the past five years, the Canadian retail landscape has undergone a dramatic transformation. Major department stores and mall anchors are disappearing, the number of new independent stores is growing rapidly and consumers are shifting to online shopping. In the midst of all of this upheaval, retail businesses are in the process of changing the way they operate and market their products and services to their customers.

Retail in Canada has always had its ups and downs, but the way things are going, the retail apocalypse may be the end of days.

Retail Canada’s survey of business owners and managers found that they expect many of their physical stores to close their doors this year and nearly a third say that the number of Canadian-based bricks and mortar stores will shrink.

A survey by the Canadian Federation of Independent Business, found that 25 per cent of retail business owners believe that the number of Canadian-owned stores in Canada will fall. That’s up from 17 per cent in November 2014.

“They’re still selling things online,” said Cathy MacInnis, President of the Canadian Federation of Independent Business (CFI). “There’s a lot of people that like to shop in stores and the way that they shop and prefer to shop. But they’re more comfortable online, they’re seeing the prices online and they’re seeing the choice.”

The results of the survey also revealed that more retailers are expecting a “significant” drop in sales, from the current levels. MacInnis said that the increase in the number of retail closures is largely the result of a rise in job losses that were not anticipated. She also suggested that store closures are driven by a shift in consumer behavior.

“The survey showed that retail sales are declining,” she said. “One of the reasons that retail sales are declining is they can’t find the products. They’re not finding the products online. And so they’re going to close.”

Canada’s retail sector has experienced major upheavals in the last decade and some experts have attributed the decline to high-profile store closures, an economic slowdown and the increase in online shopping.

MacInnis says the rise in closures over the last year or so are a sign of the retail revolution that began back in the mid-1980s. She says online retailers are beginning to outpace the growth of physical stores.

“It’s almost at a point now that the online sales are outpacing the bricks-and-mortar sales. It’s beginning to tip that way,” she said.

A recent BMO report found that retail jobs in Canada will decline by 40 per cent between 2011 and 2016, with jobs in the clothing, clothing accessories and footwear and footwear accessories sectors expected to decrease the most, by almost 70 per cent.

“The growth of e-commerce is making life easier for some retailers because they can sell into more outlets,” said MacInnis.

But she says the rise of online shopping has also created its own set of challenges.

“Retail is much more complex now than it was before,” she said. “The internet is helping smaller retailers — those in the $1 million and below range. But it’s making it much more challenging for larger stores, who are struggling to stay competitive, and a lot of them aren’t.”

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MacInnis says the BMO report says that clothing retailers are now spending over 20 per cent of their sales on advertising and marketing, and it makes up one-third of their overall sales budget.

But she says traditional stores like The Bay still hold a lot of sway with customers.

“There’s still a very loyal fan base of shopping at certain retailers. The more shoppers, the more sales. That has always been the case,” she said.

MacInnis also suggests that “there’s a little bit of backlash” with the rise of online shopping, and people are starting to go back to buying the products that they see, touch and feel.

But the online market continues to grow.

MacInnis says she’s watching with interest the changes happening in that market, but warns the consumer that the biggest risks to the Canadian retail industry are the low prices online retailers are offering and the competition with the online retailing giants.

“The retailers that have the best brand name are going to do well in the future. So the big retailers — you don’t have to shop at Wal-Mart. You don’t have to shop at Target. You don’t have to shop at Sears. There are other options,” MacInnis says.

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