Rising inflation rates have Canadians clinging tightly to their wallets as the cost of gas, groceries and more is constantly rising.
With shoppers staying away from recreational spending, that’s translating into lower sales in Canada’s retail sector, retail analyst Doug Stephens told Your Morning on Tuesday. CTV. Rising prices, coupled with a slower pace of economic growth, will put more pressure on the average consumer, he said.
“It all adds up to the evil twin of inflation, in effect, stagflation, which means we have a shrinking economy and rising prices at the same time,” said Stephens, founder of Retail Prophet, a consulting company. “[This is] putting a tremendous amount of pressure and stress on consumers just in terms of what to expect next.
Several factors play a role in driving up prices, Stephens said. Supply chains hit hard by the pandemic, for example, are still trying to recover from high raw material and freight costs, leading to a lack of consistency in the availability of goods. The current crisis in Ukraine is also putting upward pressure on oil prices. Finally, the pandemic has seen average house prices soar to their highest levels on record in an overheated economy.
“Canadians have experienced this outsized growth in the value of their real estate holdings over the past two years,” Stephens said. “Everything is happening at once.”
Consumers aren’t the only ones feeling the strain of Canada’s current economic environment – retailers are too. Stephens’ advice to retailers is to focus on maintaining relationships with current buyers.
“Retailers are rightly scared of what’s to come,” he said. “It really means stepping back, finding out who you are, making sure you’re solid in your positioning, and really strengthening the connections you have with the customers you have today.”
Watch the full video with CTV’s Your Morning at the top of this article to learn more about the impact of rising prices and slowing economic growth on the retail sector in Canada.