If you take a walk through any major shopping complex, you’ll notice Canadian retailers are rolling out Christmas merchandise earlier than ever before to get a jump start on the holiday season. November and December retail sales represent the most critical period of the year for retailers and often account for 20 percent or more of annual sales.
Canada enjoys a relatively stable economy and has fared better than most countries during the last recession. However with the economic doom and gloom these past few months, we may see the global economy plunge back into a slump and we won’t escape the fallout. Although there is a real threat Canada may head back into a recession, economists predict we’ll be held back by a weak U.S. recovery along with a European debt crisis that may take years to repair and stall our economy for some time to come.
The immediate challenge for most Canadian retailers as we navigate these economic times is how to manage their business for the short term especially heading into the critical holiday sales period.
The last recession brought about a dramatic shift in shopping habits as Canadians went on the hunt for deals and cheaper prices. As any savvy retailer knows, this shopping pattern has now become the norm for today’s consumers who aren’t spending as freely as they once did. In 2011, smart retailers will have purchased goods to cater to the new consumerism including more private label brands and closely monitored their inventory to avoid taking markdowns on overstocked items that can affect their bottom line.
In the U.S., ShopperTrak, which counts foot traffic at malls and blends it with economic data to predict trends, says in a recent news forecast that national retail sales will rise by just 3% during November and December, less than last year’s 4.1% gain. It also expects foot traffic to continue decreasing through the end of 2011, due to high unemployment rates and higher gas prices.
ShopperTrak’s forecasts can also apply to our Canadian retail sector and I’d like to share a few of their predictions for the coming holiday season:
As shopper traffic is declining, every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales.
Consumers are increasingly sensitive to value. Lower-end apparel and accessories specialty stores may be pressured to reduce prices to compete with discount chains. Higher-end stores, however, may have an advantage this season as shoppers seek quality purchases offering perceived value and longevity of use.
Value-conscious consumers are increasingly using the internet to stretch their dollars by shopping at online outlets with potential for deep discounts or researching premium priced, large purchases. When they do walk into stores they have a purchasing strategy and are less likely to browse. This will account for significant foot-traffic losses this holiday season.
Don’t expose your business to potential losses this holiday season. Reduce your financial exposure and count on an extra layer of protection by guaranteeing your accounts receivable against bad debt through Veri-Cheque’s Account Receivables Protection Plan. It’s certainly a very good defensive move for companies looking to stay solvent over the long run. Feel free to give us a call at 800 (268)-3284 to get more information about how we can help your business.