This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Debt-conscious, Deal-addicted Canadians A Boon For Discount Department Stores: CIBC

Increasing competition will challenge retailers but make it a good time to be a consumer

TORONTO, March 28, 2013 /CNW/ - Discount department stores are poised to take more market share in the year ahead as debt-conscious consumers and tame wage growth weigh on Canadian retail spending, according to CIBC World Markets Inc.

"Canadians have heard the message from Ottawa: be careful what you borrow for. But turning more prudent on debt accumulation has meant leaner times for retail spending growth over the last year," says Avery Shenfeld, Chief Economist at CIBC, in a note published for CIBC's Retail and Consumer Conference happening today in Toronto.

With a weak finish to the 2012 holiday season, retail sales grew at lean rate of 2.5 per cent last year, marking "the second year of deceleration from a heady 5.6 per cent pace in 2010, when households were much more eager to borrow at low rates to finance their shopping spree," notes Mr. Shenfeld.

With job growth expected to decelerate in 2013 and wages remaining "fairly tame" in 2013, disposable income gains will likely remain modest this year.  "In that climate, discount stores will continue to grab market share, particularly given the entry of a major U.S.-based player this year," says Mr. Shenfeld

In another conference note, Perry Caicco, a CIBC Equity Analyst who covers the consumer and merchandising industry, identifies two other consumer trends likely to exert competitive pressure on the retail sector.

One is the increasing tendency by Canadian consumers to "purchase on promotion."  Mr. Caicco says that "over the last three years, a material amount of the windfall from a strong Canadian dollar was passed through as increased deals." This has made Canadian consumers, who are already debt-conscious, "increasingly addicted to deals" and "more sceptical than ever about regular prices," he says.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,935.11 +222.45 1.26%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs