MONTREAL — Things are looking up for the Canadian economy, but that could be a mixed blessing for retailers and trade show organizers.
Canada’s economic growth will outpace that of all other G7 countries this year and next, according to the International Monetary Fund. Its gross domestic product will expand 3.1 percent in 2010 and 3.2 percent in 2011. The U.S. will match Canada’s growth this year, before falling behind next year, according to the IMF’s World Economic Outlook report.
This means, however, that Canada’s retailers and trade show groups must also contend with a Canadian dollar that has appreciated 25 percent against the greenback from a year ago. The Canadian dollar is now flirting with par, and some economists are predicting it will go even higher — which is bad for Canadian exports. Investment firm UBS Securities estimates the local dollar’s rise since 2002 has hit Canadian exports by 14 percentage points, with a loss of 553,000 Canadian manufacturing jobs.
As for retail, luxury, home furnishing and sporting goods stores seem to be leading the way in sales growth year-on-year, according to the Retail Council of Canada. And based on early estimates, the RCC predicts a rise of 3.5 to 5 percent in apparel, accessories, cosmetics and footwear sales from 2009.
“While retailers are enjoying the moment, let’s also consider how long this can last if the U.S. economy does not develop some momentum,” said RCC president and chief executive officer Diane Brisbois. “Our neighbor is still in deep financial and fiscal trouble. If these challenges hold back the rest of the U.S. economy, Canadian retailers may feel the impact in two ways. First, their customers in exporting industries, including resources, manufacturing and some services, may continue to worry about their jobs and hold off buying or stay with value-priced bargains.
“Second, the Canadian dollar could continue to appreciate, meaning more cross-border shopping as increasingly hungry U.S. merchants continue to offer hyper-aggressive markdowns. The marginal sales lost do not have to be large to take some of the zest out of Canadian increases,” she added. “Remember, most Canadians live within 100 miles of the American border.”
Cross-border shoppers are most often in the market for fashion, since the price is high enough to justify the gas money to the closest U.S. mall, according to Marshal Cohen, chief industry analyst with The NPD Group market research firm.
“Fashion tends to be the top border-crossing product,” he said. “It’s really generally about product that the consumer can easily transfer.”
The silver lining is that most Canadian consumers are showing optimism and have begun to open wallets a bit wider this year, according to Brisbois.
What this all means for trade shows is unclear.
The Mode Accessories Show will feature fall collections Aug. 8 to 10, at the Doubletree Toronto Airport Hotel. More than 210 exhibitors will showcase an extensive range of accessories, according to organizer Alice Chee. Anticipated attendance is 3,500 buyers from boutiques, accessories stores, specialty stores, fashion chains, gift stores and salons.
Jewelry will be a strong category for fall, either delicate and small, or big and bold — not much in between. Statement necklaces close to the face are still important, but look for long delicate pieces to complement longer fall silhouettes, said Chee.
“Gloves are the most directional trend on the runway, from full-length showstoppers to racy driving gloves. Fingerless, even in shearling, provides practical solutions for the mobile media generation.”
As for apparel, buyers can expect longer hemlines and proportions in jacket silhouettes, larger lapels, loose, away-from-the-body shapes and wider pants. Prints will feature winter florals (large and small), and animal prints.
The Profile and 100% Fresh Show at the Toronto Congress Center Aug. 22 to 24 expects an uptick in exhibitors and attendance to reflect an improved economy, based on early registrations, said organizer Michael Dargavel.
Toronto’s LG Fashion Week has an enviable problem in that it has outgrown its two previous venues and is looking for new digs to host its next event, Oct. 18 to 23.
“We need over 50,000 square feet and we rely on corporate sponsors, as we get no government support,” noted Robin Kay, president of the Fashion Design Council of Canada, which organizes the week. “We’ve built the brand and now we have to work with the designers to get them export-ready, as the consumer market in Canada is not very big.”
LGFW is important enough to attract international buyers, but Kay would like to see more foreign designers, like Kate Moss for Topshop.
Vancouver Fashion Week featured more local than international designers this past spring because of the Winter Olympics, but expects to put the emphasis back on international designers at the Nov. 3 to 8 event, said VFW spokeswoman Pam Saunders. “The number of buyers was down as people felt they wouldn’t be able to book hotel rooms due to the Olympics. But we had a number of U.S. lines at the show, including Civil Society Clothing and Hot Air Clothing from Los Angeles.”
VFW added hair and jewelry products this spring and expects to maintain them in November. But some fear the strong Canadian dollar might discourage American buyers from attending.