Canadian retailers set for holiday season price cuts

Tue Nov 22, 2011 3:45pm EST
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By Allison Martell

TORONTO (Reuters) - Canadian retailers face a tough choice this holiday season: either hold the line on prices and risk scaring off consumers, or cut prices and trigger a downward spiral of profit-smothering discounts.

Ed Strapagiel, executive vice president at KubasPrimedia, a market research firm in Toronto, said the price slide has already started, and could accelerate this weekend.

The Canadian operations of Wal-Mart Stores Inc are planning their first "Black Friday" promotion at the end of this week. Strapagiel said rivals will likely follow suit, mimicking the big sales featured by their U.S. counterparts on the day after U.S. Thanksgiving.

"Other retailers are going to try, too," he said. "Regardless of any evidence that this is a good thing to do, they're going to feel like they have to compete."

Retailers may have little choice if they want to lure Canadians into malls. The mood among shoppers has soured since this year's stronger-than-expected back-to-school season.

In October the Conference Board of Canada's index of consumer confidence slumped to its lowest since May 2009 as negative economic headlines gave Canadians reasons to worry about the future.

Holiday budgets are tight, and consumers will likely choose basic gifts over luxury goods, the experts say.

According to Deloitte's holiday shopping survey, 40 percent of Canadians plan to spend less this holiday season than they did last year, and only 5 percent plan to spend more.   Continued...