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(Darren Calabrese/Darren Calabrese/The Canadian Press)
(Darren Calabrese/Darren Calabrese/The Canadian Press)

No Canadian retail recovery in sight Add to ...

There's not much reason to expect a Canadian retail rebound in 2011.

Retail sales will rise 5.1 per cent this year, the same as in 2010, according to a study by retail consultancy KubasPrimedia. Nevertheless, core segments such as food and drug stores will contribute more to the 2011 sales results while the automobile business will make a little less of a difference than a year earlier, the report predicts.

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"Nothing in the outlook at this point indicates a significant retail recovery going into 2011," says the study, which was released on Monday.

"On the other hand, if meaningful economic recovery finally does arrive in 2011, the stage could be set for significant improvement in the back half of the year."

For now, Kubas doesn't forecast a meaningful economic rebound this year, projecting that growth in the retail business will be the same as in 2010. Last year, total retail sales hit $436.5-billion, an increase over pre-recession times. In contrast, U.S. retail sales failed to regain what was lost in the recession, the report says.

Even if more buoyant times do arrive in Canada, "the honeymoon could be short-lived for incumbent Canadian retailers," the report warns. That's because a growing list of U.S. retailers plan to open stores here, or are considering making the move. U.S. discounter Target Corp. is the biggest player that has announced its entry into Canada by 2013. Others launching stores in Canada, or considering it, include Marshalls, Kohl's, Express, Zumiez, J. Crew and Dollar Tree.

"These operations are looking for better retail growth opportunities that are currently not available in the U.S. market," the report says.

In 2011, Kubas expects more balanced sales gains among different retail segments.

For example, it expects food and drug retail sales to increase 3.1 per cent this year, compared with 2.5 per cent in 2010 when food deflation hit grocers. Sales at other merchants will rise 4 per cent in 2011, compared with 3.2 per cent a year earlier, it forecast.

Auto sales will rise 8.1 per cent this year, compared with 9.5 per cent at new car dealers in 2010, it predicts.

Kubas also said that one of the strongest segments of the past holiday season was the clothing category, where sales jumped 7.1 per cent from a year earlier. Still, the report adds, "this is not necessarily a good sign -- do you remember what it was like when you were a kid to get clothing at Christmas instead of a toy?"

Follow on Twitter: @MarinaStrauss

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