You’ll be happy to know that food and general merchandise products will continue to experience retail deflation in North America (and especially in Ontario, Canada).
That’s good news if you are a consumer. It is bad bad bad news for a retailer and even tougher for ‘mom and pop’ shops.
But overall, Price Wars are positive for everyone and are a result of increased retail competition. Competition drives deflation (a decrease in the retail price) and in an economy where so many commodities and products are going up up up in $, it is nice to see the things we want and need are actually going down.
Major U.S. companies are heading North – the Canadian frontier – an untapped market. For example, in Canada the implication of the USA-owned Target entering the retail stage has every retailer holding their breath. This is the quiet, just before the storm. With major retailers like Walmart, Loblaw, Sears, Metro,The Bay, Sobeys, etc etc – the market is already supersaturated with supermarkets!
Most analysts believed that after Walmart’s entry, the retail industry was at capacity. They were wrong. While profits have eroded, all major retailers still stand. So far. However, if and when interest rates start to rise, our consumer debt will drive a tighter money belt.
Right now our consumer asset to debt ratio is 150% (for every $100 we make, we owe $150!). So we’ll see a crack in the mighty brick and mortars soon (interest rates can only rise from here). Hang on tight, the ride will be a wild one.
Save your money and take advantage of the savings coming soon.