24 November 2009

Shoppers approach holidays with frugality

This article is extracted from the 23 November 2009 edition of “globeandmail.com”.

Frugal may be “the new cool,” but Canadian shoppers are still doing their part to help drive the recovery as American consumers remain wary.

In Canada, where consumers account for 60 per cent of economic activity, shoppers remain out in force as rising house prices and a more stable labour market bolster confidence….

A Statistics Canada report Monday showed retail sales rose 1 per cent in September – topping forecasts and marking the seventh gain in nine months.

However, sales were still 3.3 per cent lower than in September, 2008. Sales south of the border fell in September and, excluding autos, were flat in October.

“In Canada, consumers will be significant contributors to growth” partly because they're less shell-shocked than their American counterparts, said Krishen Rangasamy, economist at CIBC World Markets Inc. “In the U.S., the consumer is going to struggle.”…

Consumer confidence is slowly returning after it plunged earlier this year, said John Williams of retail consulting firm J.C. Williams Group.

“Canadians are ignoring the disastrous news in the States, and have to realize our banking system is solid ... and our housing market has a huge impact on how people feel,” he said, adding that low borrowing costs are also underpinning spending.

That said, he doesn't expect a quick return to boisterous levels in previous years. “Frugal is the new cool,” he said. “People will be looking for things they need rather than want. Flashy consumerism is out, for sure.”…

The biggest increase was at general merchandise stores. Miscellaneous retailers saw gains as sales at sporting goods, hobby, music and book stores tallied the largest increase in 18 months. Sales also rose at furniture, home furnishings and electronics stores.