High-end and low-end retailers alike have seen a jump in sales this quarter. Those retailers whose products fall somewhere in the middle, however, have witnessed a vast decline in profits.
“Retailers that provide middle-priced products seem to be losing ground,” says Maureen Atkinson, a senior partner at retail consultancy J.C. Williams Group. “We’ve seen this phenomenon evolving for years, but now we are seeing the impact on our retail base.”
This quarter, the Hudson’s Bay Company reported an increase in sales in its high-end department stores; Dollarama, the country’s largest low-end bargain store, also noticed an upward trend. Conversely, those stores that sell to middle-income earners—like Sears and Reitmans—are losing large sums of money as consumers are spending elsewhere.
While it may seem that these trends reflect a growing sense of wealth inequality in Canada, experts say the trends are less about economic disparity and more about middle-income consumers bargain hunting in some areas and trading up in others.
“The fact that the same consumers are shopping at Dollarama and getting their coffee at Starbucks is a pretty good illustration of this trend,” says Atkinson. “I don’t think it’s about inequality, though there is probably a segment of Dollarama shoppers who can’t afford to shop elsewhere.” CJ
