A week from today, Steve Matyas will know what kind of retail year his company is likely to have.
The president of Staples Canada said Aug. 15 is the key date in the office supply giant’s fiscal year.
The back-to-school shopping season represents Staples’ Christmas, and Matyas, who was at Langford’s Staples location during his annual cross-country tour of stores on Tuesday, said he likes what he has seen so far.
“I’ve been to the East Coast and now here, and I’m pretty encouraged by what we’re seeing.
“We do a disproportionate amount of our sales and profitability during back-to-school,” he said, though he’s quick to note Staples is still, first and foremost, a business supply company. “But we dabbled [in school supplies] and realized we had a tiger by the tail, and then we got into it in a huge way in 1992.”
According to a report released Tuesday by Ernst & Young, Staples and other retailers who rely on a strong back-to-school market should get a solid bump this year.
The study, citing a lower Canadian dollar that will keep consumers close to home instead of cross-border shopping, suggested retailers will see a four per cent increase in back-to-school spending in Canada.
“And when we say that, [we are referring to] people who physically go cross-border, but also people who shop on U.S. sites,” said Daniel Baer, Ernst & Young’s Canadian retail and consumer-products sector leader.
The report said child-care benefit payments from the federal government will translate into additional disposable income for consumers to devote to back-to-school spending.
However, those same consumers will face inflation, higher housing costs and economic uncertainty, which could dampen consumer confidence.
Matyas said the early indications are the country as a whole is feeling pretty confident, though he expects consumers in Alberta and Saskatchewan are going to be more circumspect with their money as a result of the cut in oil prices.
The Ernst & Young report noted B.C. and Ontario will lead the country in back-to-school sales, while the Maritimes and Quebec will lag behind the national average. Alberta and Saskatchewan, typically leaders in the category, are expected to post lower back-to-school sales.
“I think Alberta is still shell-shocked with oil prices more than halving over the last year,” Matyas said.
As for the impact of a low Canadian dollar, Matyas said it will be significant.
He said Staples Canada has not passed on the increased costs it faces to consumers for fear of sticker shock, and as a result the company will see its profit margin feel the bite this year.
“But we are in it for the long term. If we think there’s value to maintaining pricing that keeps us in consideration and keeps customers feeling confident and they trust us. we’d rather do that and take a long-term approach,” he said.
Matyas does expect they will find some balance with the devalued Canadian loonie and high gas prices keeping consumers spending in Canada.
Meanwhile, an Ernst & Young report on redefining retail loyalty looked at the shopping habits of those born between 1997 and 2000 and found a distinction among this segment of Gen Z compared to older generations.
“Coming out of the 2008 recession, I think most people had been living in an economy that’s relatively uncertain,” said Baer. “That’s kind of driven their experience, so they are quite value-driven. They look for things like free shipping, they look for special sales and discounts more than a baby boomer that may be more economically secure.
“I think it’s just a function of when they’ve grown up and what they’ve seen going on around them that has made them more value-conscious in that way.”
In their hunt for deals and use of technology to comparison shop, Gen Z members are less likely to be devoted to one brand, Baer said. “They’re also influenced a lot by social media, and then again, that makes them less brand-loyal. Because if they are influenced by their friends, what they see on social media, it is a bigger influencer than it would have been for baby boomers and then millennials.”
— with files from The Canadian Press
