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Recent improvements in the economy and consumer confidence won't necessarily translate into strong sales this holiday season, according to an Ernst & Young report. The firm expects holiday sales to remain flat this year compared with 2008 sales. Given the weakness of last year's holiday season, this means another difficult year-end. Popular holiday categories such as apparel, electronics and toys are likely to suffer deflation this year as retailers rely on heavy promotions and deep discounts to draw in consumers who have come to expect sales in these categories. However, since retailers have reduced purchases and inventory levels this year, such discounting will be somewhat less prevalent than last year. Retailers in B.C. and Alberta may see a more difficult holiday shopping season, the report said, given the recession has hit Western Canada harder than other provinces in recent months. Retailers in Ontario and Quebec are likely to fair better with relatively stable retail sales in the last three months continuing to the rest of the year. Consumers are expected to be far more price savvy this year and are more likely to spend their dollars at discount chains, warehouse clubs and dollar stores. Daniel Baer, Ernst & Young's national retail industry leader said, "Shoppers are likely to hold off on making any purchase until they find the bargain they're looking for. Consumers will likely avoid impulse purchases." Baer suggested there may be pent-up demand for certain products, such as flat-screen televisions, laptop computers or portable devices like iPods, but consumers will still be price conscious.
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