Canadian consumers learned last year that shopping in person or buying online and picking up in store is a very efficient and guaranteed way to get what you want during the holiday season.
“Going into holiday shopping, the malls are back. If you look at the apparel sales and you look at inflation-adjusted sales, it’s a big winner this year. It makes sense to me. A lot of us lived in clothes that you may not go outside in,” said Domenico.
But people are back to having a social life and taking part in entertainment activities as well as heading into the office.
“Malls, the traffic is exceeding last year and in a lot of malls it’s meeting or exceeding 2019 traffic,” she said. “One of our assets is 30 per cent higher than 2019 traffic. I don’t believe it sometimes.”
That may appear to be contradictory to what’s happening out there as some surveys these days are showing that consumers may be pulling back on holiday shopping due to inflation and rising prices for goods.
But Domenico said when you look at the inflation impact it’s the daily essentials that are affected. Food and gas.
“When you actually look at the sales . . . you have to first start looking at inflation-adjusted sales, not just base sales. We haven’t had to deal with inflation in a very long time,” she said. “So, people are concerned because they’re seeing the impact every day but I think when they take a step back and they look at their pocketbook and their savings accounts, we’re seeing continued high savings rates from the previous high that we had in 2015,” she added.
“We’re still above 2015 savings rates in Canada. I think it’s a more thoughtful consumer and it’s not like a party and throwing caution to the wind. I think consumers are smarter today than they were 25 years ago because of the internet, because of information. They know what they want, they know what they need and are executing on their choices.”
With news of inflation every day, consumers are looking more closely at their discretionary and non-essential purchases.
“But apparel is way up. Traffic is way up in the enclosed malls. That’s telling us people are out and shopping. Yes, we are just coming off Halloween where we’re focusing on our shopper experiences like never before but overall the consumer is more positive than I think the headlines would indicate,” said Domenico.
She said consumers are shopping again this year earlier in the holiday shopping season.
“I think the satisfaction level when you click and collect or buy online and pick up in store for the shopper is higher,” added Domenico.
“We’re seeing a lot of retailers actually expand. We’re seeing an investment by our retailers. From a national point of view, I think the national and regional retailers are in very good shape financially. They have a finger on their sales. They know what they’re doing.
“Our concern is the local and the restaurant sector – inflation, labour shortages are hitting their category the most. Even though regular sales when you look at food and beverage from StatsCanada, it looks like it’s doing really well, when you pull back the inflation on it, it’s flat. But if you just look at sales, it looks like it’s 12 per cent up. But when you look at the sales that are adjusted, it’s flat which is hard to reconcile. And those numbers are only where we were in 2019.
“The other thing about the small business owner is they received a lot of the COVID assistance from the government and a lot of them took on debt and that debt is more expensive today than it was when they first took it on in 2019, 2020, 2021. So how their capital stack is able to withstand these interest rates, that’s another reason why we’re somewhat concerned.”
Domenico said ecommerce sales are showing a natural growth projection. We’re back to where we were if COVID hadn’t happened. It will remain a strong and important channel for retailers and consumers but it’s very expensive for retailers to do. It’s not green for retailers and for the industry as a whole. And it’s much more efficient to buy online and pick up in store.
“The big thing I’m going to be watching in 2023 is consumer confidence. The global situation is a test. We haven’t had the pressures in Europe and other places to the same extent and how that’s going to impact the global economy which does have an impact on consumers’ confidence and the inflation,” she said.