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People walk in the old town during a snowstorm in Quebec City December 22, 2013. (MATHIEU BELANGER/Reuters)
People walk in the old town during a snowstorm in Quebec City December 22, 2013. (MATHIEU BELANGER/Reuters)

ECONOMY

Ice storm, power outages could hammer retailers Add to ...

The massive winter storm that has slammed Southern Ontario and Eastern Canada, leaving tens of thousands of households without power, threatens to derail projected growth in Christmas retail sales with ripple effects that could spill into 2014, says the head of the Retail Council of Canada.

Diane Brisebois, hunkered down in the Toronto region, said her members were reporting year-over-year growth of 3 to 8 per cent in Christmas sales, but that picture has become uncertain in the population-heavy areas of Canada affected by the storm, which comes in the crucial days before Christmas.

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The storms have foiled the ability of shoppers to move about in affected regions, and could distract them from shopping altogether as they deal with power outages at home. Some malls have faced power shortages themselves.

“If the weather continues to be challenging, there is a portion of sales that will be lost. What portion? It’s impossible to tell,” said Ms. Brisebois, who noted she has never seen a scenario like this unfold in 20 years with the council.

She said the situation will have a massive impact given the concentration of Canada’s population in the large markets of Toronto and Montreal, with the question being how quickly power and normalcy can be restored in both areas ahead of Christmas.

Challenging weather could mean a loss in sales that retailers will never recover, but it’s impossible to project that impact at this point, she said.

For some retailers, Christmas sales can represent 50 per cent of business, she said.

Anything that severely affects those sales could reduce working hours offered to employees, capital investments by retailers, and purchases from suppliers. “It has a ripple effect,” Ms. Brisebois said.

“We’re talking three days before Christmas! Every day counts for all retailers, big and small.”

The issue is not just the sale of gifts, she said, but also the sale of food for holiday celebrations.

She said the only lever the council has, beyond hopes that storm conditions ease enough to allow shoppers to get out and back into the mood for shopping, is to lobby municipal leaders in affected areas to allow longer shopping hours – a possibility the retail council is beginning to consider.

But others were more optimistic. The BMO Financial Group had forecast a climb in holiday spending for the third straight year, up 12 per cent from 2012.

Douglas Porter, chief economist at BMO Capital Markets, said he expected a continued increase, but that it could be “a bit weaker” than expected. “It will clip retail sales at a critical juncture,” he wrote in an e-mail exchange.

Mr. Porter, hunkered down without power at his home, also noted that restaurants will be affected, but he said the impact could be mitigated to a degree by easing storm conditions.

Avery Shenfeld, chief economist for CIBC World Markets, said, at the very least, the storm could delay spending to Boxing Day sales where retail margins could be lower.

Despite the storm, a spokesperson for one of Canada’s most iconic malls – the downtown Toronto Eaton Centre – said the mall was open for business Sunday, continuing a shopping season that has been busy until now. The power outages affected several malls across the Toronto region, including the Shops at Don Mills, which was closed. Fairview Mall, Vaughan Mills and Yorkdale Mall were open, but with some stores closed.

On Sunday in Quebec City, a tourism official predicted complications due to strong winds combined with up to 30 centimetres of snow and ice pellets. “This kind of weather will certainly hurt December sales, but we hope that nicer weather in the coming days will help us make up some of the losses,” said Pascale Moisan, head of the Petit Champlain tourist business district.

- With a file from Rhéal Séguin and The Canadian Press

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