Amid high interest rates, inflation and decreased consumer spending, Canadian retailers have their work cut out for them trying to get people to make purchases this Black Friday, according to experts.
Bruce Winder, retail analyst and author, told CTV News Ottawa Thursday that Canadians are spending more on things like travel and less on goods like apparel and electronics, the kinds of items that are often heavily discounted on Black Friday.
He added seasonal hiring is down by about 30 per cent in Canada, which could indicate that retailers are not anticipating a lucrative sales season.
His comments come as inflation remains above the Bank of Canada’s two per cent target, keeping prices high for household goods and large purchases, even as higher interest rates are causing many homeowners’ mortgage payments to balloon.
Deloitte says it expects the average Canadian shopper will spend $1,347 this holiday season, down 11 per cent from last year. Roughly half of the more than 1,000 Canadians the consultancy company surveyed plan to buy only what their family needs this holiday season. Seventy-one per cent will seek items on sale and 29 per cent will seek less expensive retailers to shop at.
Ian Lee, associate professor at Carleton University in the Sprott School of Business and former banker, told CTVNews.ca Friday businesses consider Black Friday extremely important because of increased sales, and as consumers dial back retail spending, the importance of Black Friday increases.
“Black Friday is an antidote, if you will, that has the affect of offsetting the negative trend of increasing interest rates and inflation. So it’s a boon and a benefit to retailers to have Black Friday sales to get people shopping again,” Lee said.
He added in his recent personal experience he’s noticed some businesses using different discount strategies this year, possibly in an effort to draw more customers this weekend.
“I don’t have hard trend data … But it seems to me that retailers are moving away from sort of slashing 20 per cent to 30 per cent off across the board, they are using a lot more of—what I would say—targeted sales. They are offering sales on maybe five or 10 or 15 products but they’re offering a very significant price reduction,” he said.
Winder said during tough times it’s important to create a budget and stick to it, and when you see something you want that is heavily discounted, do some research and make sure the deal is as good as it appears.
“Comparison shop to make sure you’re getting a good deal and keep within your budget don’t over spend,” Winder said. Lee agrees, he stressed the importance of comparing prices between stores when bargain hunting, especially when it comes to electronics.
“Because of the tough times we’re in … I believe what we’ll see once the data is in three or four months from now, that a good number of consumers moved their Christmas shopping forward—because you’ve still got to do shopping for Christmas—and they moved it forward to Black Friday to get really good deals, but they won’t be shopping as much at Christmas time.”
Lee predicts it is unlikely people will spend big during Black Friday sales and then continue to spend the same large amounts during the holiday season.
“I think it’s going to be much more constrained,” he said. “People have really dialed back on retail spending … and that’s how people are coping with this period that we’re in right now, these are the strategies that individuals are using, they’ve dialed back on their discretionary purchases.
“Of course you continue to make your mortgage payment, you continue to make your rent payment, you pay your utility bills—but anything discretionary, you know, clothing expenditures or electronics are being cut back and postponed, and people are doing that because they have less money.”
Asked whether the pandemic has influenced the way people think about gift giving, especially under tight financial circumstances, Winder said he expects people to do things a bit differently this year.
“I think more people are going to do what they call a ‘Secret Santa’ where you buy for one person versus everyone,” Winder said. “I think that people are going to make more gifts, I think they may even thrift some gifts believe it or not, and just spend a little less but try to enjoy the moment.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
