Retail prices expected to drop

A potentially huge sigh of relief for your bank account. A new survey suggests that — for the first time in a long time — we could see a drop in the price of goods across several industries. The American Express sponsored research found that 48 percent of retailers across Canada plan to reduce their prices to retain customers.

Nearly half of retailers across industries including grocery, pharmacy and apparel say they’re lowering prices to get you in the door. One expert says part of the reason, is brick and mortar stores now have to compete with online shopping.

For a Tuesday afternoon, Mapleview Mall in Burlington is fairly busy. The parking lot is packed, foot traffic is high and the ‘sale’ signs seem to be attracting a crowd.

“I find the prices are fairly competitive in this mall so I don’t have any concerns. But I’ll always take a savings.”

An American Express sponsored survey reveals relief is on its way. 48 percent of businesses plan to lower their prices this year compared to 35% in 2012.    And 83 percent will offer sales, promotions or discounts to win customer loyalty.

“It’s a good idea. I’d go for it.”

“If something was cheaper, I’d buy it.”

“I think it will increase competition because more people are going to want to buy things.”

Mandeep Malik is an assistant marketing professor with the DeGroote School of Business: “I think it’s a smart thing to do. What we are seeing is that Canadians are spending a lot of money online.”

DeGroote School of Business assistant marketing professor Mandeep Malik says retailer competition has shifted away from traditional stores: “They’re competing with providers in the online domain. Those providers are very aggressive marketers. They don’t have the same costs, they don’t have the same infrastructure and they’re looking at driving volume.”

Malik says last year Canadians spent somewhere around 22 to 25 billion dollars online.  E-commerce is growing at a rate of about 30% per year.  Traditional retailers aren’t seeing the same growth.  Lowering prices is one way to keep up to the competition.
But Malik says it’s too early to tell exactly when we’ll see prices fall: “But if retailers have indicated that this is their intent we’ll see it. Chances are we’ll see it closer to the busiest shopping season — Christmas.”

When fall arrives, Malik predicts we’ll see a very different retail strategy in the market place. The survey did not say which specific businesses they polled. Out of all the industries asked, fast food was the only one that indicated they plan on improving customer service over the next year as its top strategy.