Hamilton retailers ‘hope for the best’ as inflation reins in holiday spending

As high inflation rates hit the wallets of consumers this holiday season, Hamilton's small business owners say all they can do is hope for the best."

In its 2022 holiday retail outlook, Deloitte Canada found that overall holiday spending is expected to fall 17 per cent to $1,520 per household as recessionary concerns and higher interest rates cause folks to rein in their budgets.

The report found the drop in holiday spending reflects the financial challenges of Canadians, with 41 per cent saying their household finances have declined this year.

Janet Hoy, owner of The City and The City Books, said that change in holiday spending has already made itself known, with festive shoppers just starting to trickle in through the door.

Hoy said compared to last November, the Ottawa Street North bookstore has seen a 10 to 15 per cent drop in sales and its numbers on Saturdays, considered their big day" of the week for sales, are lagging.

We're doing a couple hundred dollars less in sales than what we're used to," said Hoy. There has definitely been less shopping."

And when customers are coming into the store, their buying habits have changed, noted Hoy, describing an uptick in demand for used books and a slowdown in sales for hard covers, which are the priciest books the shop sells.

People are being more selective of their picks," said Hoy.

That slowdown in sales has also been felt by vendors who sell their goods at The Handmade House in Dundas, said owner Lyndsay McAlpine.

The King Street West shop carries products from around 150 local artisans, who help stock its shelves with everything from candles and soap to macrame and spices.

McAlpine said compared to last November, the store has seen a roughly 50 per cent drop in sales. And vendors are starting to relay their worries to her.

It's a much slower start this year," said McAlpine, noting that Christmas is often the busiest time of year for vendors. And it's concerning to me."

On top of sluggish sales, the cost of merchandise has also jumped alongside inflation.

Rebecca Bamford, owner of Citizen Kid on Locke Street South, said the cost of some lower-priced toys has increased by 30 per cent amid the pandemic, while higher shipping costs and supply chain woes only exacerbate the issue.

McAlpine said vendors dealing in bath and body products, yarn, fabric, fragrances and food products have all had to reprice their items, which in turn creates additional labour.

Books have also gone up in price, but not significantly, according to Hoy.

However, some businesses aren't passing along all of those increases to customers - and are instead opting to take a hit to their profit margins.

Hoy said the cost of ancillary products, such as local handmade cards, have increased, but she hasn't raised her own prices on those items. That means she's making 10 to 15 per cent less on those sales than she would have in the past.

Bamford has also opted to take on slimmer profit margins, noting she doesn't think it's the right call" to pass on the entirety of price increases to her customers. For example, if the cost of a product went up by $10, she might only raise it by $5 on the shelf.

We still want to be accessible," said Bamford. Wherever we can absorb a cost, we try to do it."

To top it off, Bamford noted that unlike the last two holiday seasons - which were heavily impacted by pandemic restrictions - retailers are once again competing with experiential gifts, such as trips.

The combination of all of these factors have made it hard to know what to expect of shoppers this year, added Bamford.

I hope for the best," said Bamford. And you brace for the worst."

All three merchants are reminding Hamiltonians to try and shop local this year - but only if they can afford it.

Some of the slump in holiday sales appears to be spurred by spiralling grocery bills and overall inflation, according to the Deloitte report.

The study found that 76 per cent of Canadians polled said they are reining in holiday spending because of higher food prices, followed closely by inflation worries and economic concerns.

If you have to decide between having a good, healthy meal or a book, get the healthy meal because that's more important," said Hoy. But if you can, please do (support small businesses) because we all need you."

Fallon Hewitt is a reporter at The Spectator. fhewitt@thespec.com