CONSUMERISM

Christmas is for selling

Robert Miller December 19 1983
CONSUMERISM

Christmas is for selling

Robert Miller December 19 1983

Christmas is for selling

CONSUMERISM

Robert Miller

The Canadian consumer is a hardy species, a much-pursued but canny survivor in a rough-andtumble jungle—the $100-billion-a-year retail marketplace. In hard times, consumers become elusive, making only occasional forays for essentials and otherwise hoarding scarce dollars. In better times, they become much bolder, emerging in crowds and spending in earnest. This year, as the annual Christmas shopping surge began to resemble a splurge for the first time since the 1980s began, consumers became almost brazen, and the nation’s recessionweary merchants were becoming more optimistic. Said veteran retailer George Kosich, Toronto general manager of The Bay: “We had a good October and November, and I see a double-digit percentage increase in December.”

If retailers’ widespread expectations of a busy and profitable Christmas are confirmed, the reason will be clear: Canadians have made a collective decision that the economic recovery, which has been gathering strength throughout 1983, is going to continue. Among the positive signs: the annual inflation rate is below five per cent and apparently holding; unemployment, though still a brutal reality for the 1.28 million Canadians seeking work, is down slightly to 11.1 per cent of the work force; and savings as a proportion of net income have retreated from a record 15 per

cent a year ago to 10 per cent.

There still are weak spots. British Columbia, with its key forestry and mining sectors experiencing difficulty, is showing no significant growth in retail sales, and the once-booming Alberta, the last province to fall into the recessionary well, continues to languish. But elsewhere the shoppers and spenders are back. Said Barbara Shand, national president of the Consumers’ Association of Canada (CAC) in Toronto: “I have been very conscious of more people shopping this year than last. There is more confidence in the market.”

Both the market and consumers are more buoyant. Said Christine Mercer, editor of the Ottawa-based Canadian Consumer, a monthly which the CAC mails to 150,000 members: “There is a new toughness, a new insistence on quality and value. People look at what it takes to make their money and they do not want to waste it.” The Bay’s Kosich agrees. “Our customers are much more demanding now,” he said, “and frankly I don’t blame them.”

And from the shopper’s point of view, a scarcity of spending money often promotes a reliance on the larger, established stores. Said Winnipeg lawyer Grant Einarson as he browsed in The Bay: “The bigger department stores are convenient, and time is money. For all the time you spend looking for silly bargains, you can make more money in the office.” Added housewife Lorraine Hed-

man: “The bigger department stores are more reliable. There is a bigger selection, and you can return goods if you don’t want them.”

One profound difference this year: a more orderly marketplace. There will be few panic-induced pre-Christmas sales in 1983. Two years ago retailers had merchandise surplus when December began, and spending was down sharply. Last Christmas retailers bought less stock and they ran much leaner operations. Still, they suffered further losses when Canadians stayed home and saved their money. In both cases, said Alasdair McKichan, president of the Toronto-based Retail Council of Canada, merchants “panicked a bit and began slashing prices.” The tactic provided some pre-Christmas bargains for consumers, but it did little to stop the flow of red ink in the retail industry. The Winnipeg-based Hudson’s Bay Co., for one, which operates 600 stores (under the names The Bay, Simpsons and Zellers) coast to coast, reported a loss of $122.8 million in 1982. This year pre-Christmas confidence runs through the retail industry. Said James Bullock, president of Cadillac Fairview Shopping Centres, which operates 28 large retail developments (including the giant Eaton Centre in Toronto and the Pacific Centre in Vancouver): “It is going to be a strong Christmas. I don’t foresee any glut, any pre-Christmas sales this year.” Added Robert Amirault, Simpsons’ general manager for sales promotion and advertising: “This year, thank goodness, traffic is up again, and I think they are spending.”

The signs are particularly welcome because Christmas is crucial to retailers. As much as a third of all consumer spending each year is concentrated in the final quarter. Throughout 1983 retailers have watched the steady growth of business (Statistics Canada reported that through August retail sales were up every month over 1982 levels), but they have not been complacent. The retailers learned hard lessons during the downturn. “As the recession reality sank in,” said Morris Saffer of the Saffer, Cravit & Freedman advertising agency in Toronto, which specializes in retail work, “both retailers and consumers accepted that things were never going to be the same again. Retailers have had to learn that the consumer demands consistency.”

Such a demanding market is difficult for inexperienced or inefficient retailers, Saffer added. “I think you could say that this is the first year of the new normalcy. It is not the old feast-orfamine approach. It is a fact of life: in hard times the strong get stronger, which is why, although I believe that

this Christmas will be satisfactory, I do not expect it will save retailers who didn’t get the job done all year.” And for the consumers, the CAC’s Mercer said the mood is similar. The general tenor of the mail her organization receives from ordinary consumers across Canada shows that there is more anger over shoddy goods—particularly automobiles—than ever before, she said.

As always, the merchants have to generate traffic to sell goods, and many of them have stepped up their advertising and promotion budgets. The preprinted flyer, tucked into daily newspapers, has replaced the heavy catalogue of the past. Said The Toronto Star’s advertising director, Norman Kirk, chairman of the advertising committee of the Canadian Daily Newspaper Publishers Association: “I think that this December will be the best in the Star’s history. The big department stores are very active this Christmas. They are really going after the consumer. Everybody is so darned competitive.” Nationally, all big dailies except those in Vancouver, Edmonton and Calgary, where the recession lingers, are showing gains in advertising linage as retailers battle for customers. Declared Kirk: “The insert market is growing fast and it is going to continue to grow.”

While the big stores—Eaton’s, The Bay, Simpsons, Vancouver-based Woodward’s—slug it out with one another, smaller and more sharply targeted operations are nipping at their heels. Indeed, shoppers seeking superbargains and not finding pre-Christmas sales this year are increasingly going to discount operations for specific cut-price items. The so-called “off price” retailers, which feature end-of-line goods from name-brand manufacturers at sometimes strikingly low prices, are finding increasing favor, especially among urban shoppers who no longer expect to buy all their goods from a single outlet.

The off-price operations often have playful names—Willy Wonderful, Bargain Harold—but they are deadly serious about their business and they cater to a surprisingly well-off clientele. Said Selma Rotman, marketing manager for the seven-store Willy Wonderful chain in the Toronto area: “I think it is going to be a good Christmas, although maybe a little harder to do business. We are advertising a little more, trying to create more traffic. But we have budgeted for a 10-per-cent gain over last year’s results, which were very high, and I think we will make it.” Rotman added that her company is not as wary as some retailers about overstocking: “I have noticed that in a lot of the toy stores the inventory situation is ridiculous—if it’s a hot item, it’s not in stock.

But we made a deliberate decision to carry a high inventory, because we cannot sell with empty shelves.”

The off-price concept still is not as popular in Canada as it is in the United States, where it is the biggest retail success of the decade. There, deep discounters have made substantial gains at the expense of the more traditional chains. But Canadian discounters are finding it more difficult to find the goods that they need priced at rock bottom. Said the Retail Council’s McKichan: “They pick up odd-lot, end-of-line merchandise where they can, but choice is limited. People in the industry say the phenomenon is unlikely to achieve the levels here that it has reached in the United States. Even Willy Wonderful’s Rotman concurred. “The Americans really understand the discount business,” she said. “It is a way of life down there.”

Still, Canada’s big real estate firms are keeping a sharp eye on the U.S. phenomenon. Bramalea Ltd. has been operating the Outlet Centre, a mall devoted entirely to discounting, in Brampton, Ont., but it has had a difficult time assembling the right mix of tenants. Said real estate and marketing consultant Hermann Kircher, president of Toronto’s Larry Smith & Associates: “Bramalea has tried very hard, but the idea has not taken off.” One problem has simply been an insufficient number of discount operators to lease to. At the same time, Cadillac Fairview achieved indifferent results with an experimental centre in London, Ont. As Bullock admitted, “There just aren’t the tenants in Canada for discount malls.” Another firm, Lehndorff Property Management Ltd., which operates 30 shopping centres across the country, has held back on plans to convert the KMart Plaza in Dartmouth, N.S., and the Riverview Mall in Riverview, N.B., to discount centres. Said Lehndorff’s Maritime regional manager, Ed McGoldrick, of Fredericton: “We are still studying the idea, but I must say there is a dearth of such centres in Canada.”

The general increase in consumer spending meant that retailers began reaping their Christmas bonanza by late November. But they had one, almost unanimous wish: winter weather. Winter across much of the country last year was inordinately mild, and in the retail trade cold and snowy weather leads to increased sales. “It seems to put the consumer in a Christmas mood,” said CAC president Shand. “There is nothing sadder than a kid with a new sled on Christmas Day and no snow.” Almost every retailer in Canada could think of at least one thing sadder: a child without a new sled on Christmas Day. With Laura Langston in Winnipeg.

Laura Langston