Toronto-based consultant and research company KubasPrimedia’s latest retail sales outlook for Canada during the third quarter of this year does not look good.
According to the report, the year-over-year growth in total retail sales was 5.6 per cent in Q1 2012, one of the best results since the end of the recession. That was the good news in this report. Now for the bad news. In Q2 sales were cut in half to just 2.8 per cent year-over-year growth. That is one of the worst results since the end of the recession.
After six months, 2012 is running at four per cent ahead on year-to-date basis or about the same as the 3.8 per cent comparable figure from last year. If you compare from 2011 where the trend was slightly upwards, 2012 it seams the momentum is heading downwards.
The economic is not helping either. Real GDP in Canada gained just 1.9 per cent in Q1 2012, and 1.8 per cent in Q2, prompting a number of institutions to lower their growth forecasts for the balance of the year, KubasPrimedia reported.
The American economy is also faltering with a revised figure of 1.7 per cent GDP in Q2. The 2013 outlook for the U.S. is also clouded by the fiscal cliff, a combination of automatic spending cuts and tax hikes mandated by past legislation that could cause a recession and increase the unemployment rate, according to the Congressional Budget Office.
Tech Data CEO Bob Dutkowsky said of the U.S. economy that it’s stagnant because people are waiting for the presidential election. “We have two candidates that are so different it will have a big impact on the country so the U.S. is in wait and see mode,” he said.
Another factor in the poor results is cross-border shopping. With duty free limits raised overnight travel by Canadians to the U.S. increased to a record high in June.
KudasPrimedia added that there are no accurate numbers on how much this impacts Canadian retail sales, but in a slow growth environment, every lost dollar huts.
The outlook for the second half indicates low growth in Canadian retail. Current projections are for an increase of 3.7 per cent in total retail sales. That’s worse than Q1, better than Q2, but not as good as the second half of last year. Retail sales are projected to be up 3.8 per cent for the year, somewhat less than the 4.1 per cent gain in 2011 provided there are no further negative economic developments.The preliminary outlook for next is more of the same, according to research from KudasPrimedia. An initial run-the-numbers-out projection indicates total retail could be up four per cent in 2013 or about on par with growth in 2011 and 2012 with only modest sales growth. KudasPrimedia also found that Target entering the Canadian market could be a factor. Another area of attention for 2013 might be dealing with various digital developments, such as omnichannel marketing, showrooming and mobile payment systems.