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Holiday Shopping Season In Canada Promises To Be ‘Drawn-Out, Profit-Shaking' Battle

Canada’s struggling economy will put a damper on holiday shopping this year, forcing retailers into a “drawn out, margin-squeezing, profit-shaking competitive battle,” a prominent retail analyst says.

“It now appears that retail sales growth is past its peak and is moderating just in time for Christmas,” retail consultant Ed Strapagiel wrote.

“The Canadian economy is not poised to help. GDP growth has been below expectations so far in 2015, increases in exports due to the low Canadian dollar are not materializing as quickly as hoped, and the unemployment rate has crawled back up to 7.1 per cent.”

Strapagiel’s is likely the first forecast for the holiday shopping season, and he was able to put it together because some retailers have already launched their holiday seasons. Canadian Tire and Walmart locations have had holiday inventory on the shelves since at least earlier this month, and Costco has been selling Christmas merchandise since July.

StatsCan’s latest measure of retail sales shows they rose 2.8 per cent in the 12 months to August, slower than the 4.4 per cent growth rate in the year before that. And much of that slower growth has been concentrated in one area: auto sales, spurred at least in part by lower gas costs and cheap credit.

Some of the savings Canadians have seen from lower energy prices are being offset by offset by higher retail prices, pushed up by higher import costs thanks to a lower loonie.

Retail prices this year have been growing at the fastest pace in at least a decade, an annual rate of 6.3 per cent through the middle part of this year.

All of this makes for a holiday shopping environment that will be “subdued,” Strapagiel says.

“Retailers who ordered their holiday stock on the basis of strong numbers in Q1 might get a rude awakening in Q4."

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