A recent article in Marketing Magazine reported that the strong 4% annual Canadian retail sales growth we’ve seen over the past couple of years is unlikely to persist. Trendex North America is forecasting a slowdown in the sector to a growth rate of 2.4% this year, falling down to 1% by 2018.
What’s behind the slowdown? The retail sector is certainly not alone. A broader economic slowdown, low oil prices, and a low Canadian dollar are the main culprits. The dollar in particular is putting pressure on retailers who are responding by raising prices, and consumers will likely respond by slightly cutting back on spending.
But it’s not all bad news. After all, 1% growth is still growth. What’s more, consumer spending has been rising relentlessly in the country (see image below). And the future is not exactly clear-cut: some are even predicting that a low Canadian dollar will benefit retailers as fewer Canadians choose to shop down South.
And while the overall retail sector might slow down, the luxury sub-sector is set for strong growth in the next few years.
In fact, high-end retailers like Nordstrom have been very successful in their recent entry into the country, and are planning to open two new stores in Toronto. Meanwhile Saks Fifth Avenue is making its Canadian debut this month.
Canadians now have more reasons than ever to shop at home. But not just Canadians: with the low Canadian dollar, look out for American shoppers braving the cold for savings on luxury products North of the border.
Overall, the outlook for the Canadian luxury retail sector is very positive. No doubt, competition will be fierce; luxury retailers with the best Canadian marketing initiatives will surely rise to the top.
Also, check out The Kit — Canada’s top brand for beauty and style — for more great luxury advertising ideas.