Shoppers have found their wallets at last, and they’re opening them
Posted: Feb 08 2011 Topic:
Have you been putting off buying that pair of Manolo Blahniks because expensive shoes just didn’t fit your recession budget? Are you humming and hawing about shucking out hundreds of dollars for a new iPhone?
Many consumers hold off on purchasing those types of luxury items during uncertain financial times, but analysts predict they’ll be making a big comeback in 2011.
“When we come out of a recession it tends to be a time when people start reinvesting in stuff that they had been missing for awhile,” said James Smerdon, director of retail and strategic planning for Colliers International Consulting, who recently attended the International Council of Shopping Centers, Inc. conference in Whistler.
“It will be the small luxuries at first. So not necessarily a strong rebound in jewelry and high-end electronics but maybe some of the small consumer electronics, also clothes and shoes.”
Overall, Smerdon predicts a five to six per cent growth in retail sales in British Columbia this year over 2010.
Mark Startup, spokesman for Shelfspace, a retailer association, agrees that retailers should be optimistic there will be growth in 2011. He points to the past several months as an indicator that British Columbia will see a steady increase in retail spending.
In November, sales rose for the fourth month in a row, increasing by 1.3 per cent, reflecting growth at most stores, according to the latest available data, released last week from Statistics Canada.
“These are very positive trends for British Columbia,” said Startup. “We can’t boast the largest growth rates as we could before the economic meltdown period but we can count on steady consistent modest growth compared with other provinces.”
Overall in Canada, the numbers mark the sixth consecutive monthly rise in sales and the largest increase since March 2010.
In spite of all the negative publicity over the HST, consumers have been spending confidently through to November, said Startup.
“It’s too early to draw any final conclusions but the immediate impact of HST has not been negative in relation to total retail spending in B.C.,” he said, adding that sales are up in all categories which bodes well for this year.
Meanwhile B.C. retailers are buzzing in anticipation of a stronger year in 2011, Smerdon noted, as U.S. companies, struggling with a slow rebound in the economy, look to expand in Canada where companies weathered the global recession better than to the south.
Much of that buzz has been generated by two major announcements coming out of the U.S. last month.
RioCan Real Estate Investment Trust announced plans for a $1 billion joint venture to develop outlet malls in Canada with U.S.-based Tanger Factory Outlet Centers.
RioCan and Tanger will acquire and lease sites across Canada and then redevelop them into discount malls where consumers can shop for brand-name and designer clothing and other retail goods.
“This is great news for Canadian retailers. Anything we can do to prevent consumers from going across the border the better, even if its U.S. retailers that are benefiting north of the border, it is still benefits us in terms of taxes,” said Smerdon.
Those would be consumers like Paulette Camozzi and her friends, who drive down to the U.S. at least once a month to shop in the outlet malls.
“The sales down there are outrageous, so much fun” said Camozzi, 54, of Maple Ridge, a day after returning from a trip to Bellingham where she and her shopping “partner in crime” Marlene Bruder loaded up the back of the car with bargains.
“Their clothes are better and there is so much more to choose from,” noting often she finds luxury brand name shoes for only $10.
Camozzi said she’ll definitely check out the outlet malls when they come to B.C., but she doesn’t believe they will ever be as cheap as the ones in the U.S.
The RioCan announcement follows a $1.83 billion deal announced on Jan. 13 by U.S. retailer Target Corp. to take over Canadian leases for Zellers stores.
Smerdon called the deal “the most significant change in Canadian retailing for the next decade.”
There are 13 stores in the Lower Mainland that are Zellers branded stores, he said, noting that it is still unknown which stores will make the switch.
“So if half or all of those convert to Target, that is a lot of money that will be floating to shopping centres and create an impetus for redevelopment of shopping centres,” he said.
This year will also see a major resurgence in retail and commercial development in B.C., Smerdon predicts.
B.C. malls are looking up as well, as sales increased by 3.7 per cent in November 2010 compared with the same month of 2009, according to a January ICSC report.
Overall mall sales dipped slightly in Canada by 1.1 per cent, except for B.C. and Ontario which held steady, reporting a modest month-to-month increase (0.8 per cent and 0.6 per cent respectively) from October to November.