Retail Watch July 30 2010

Please note: As of September 15, 2010, Retail Watch will become a new & improved Members Only eNewsletter. Valued annually at $600.00, Retail Watch will soon be available by subscription at this rate or by purchasing a Shelfspace Membership.

IN THIS RETAIL WATCH:
The secret to happiness? Own a small business
Economists decry loss of long-form census
Book reviews: Price points
Will that be cash … or cash?
Top 10 back-to-school trends for 2010

BRITISH COLUMBIA
B.C. retail sales growth accelerating
Increase the minimum wage, kill a lot of jobs

ALBERTA
What's the real value of the Calgary Stampede?
Big things in store as mall nears 50-year milestone
Spa retailers face action over Energy Star claims

The secret to happiness? Own a small business

North American TD Small Business Happiness Index reveals benefits of business ownership

Source: Canada NewsWire Group, Jul. 26, 2010

TORONTO - Small business owners in Canada are a happy group. According to the TD Small Business Happiness Index, 62% of Canadian small business owners would describe themselves as 'very happy' with only 1% saying they are 'very unhappy'.

This research - which examined the attitudes and behaviours of North American small business owners in a dozen urban centres - further revealed that nearly 9 in 10 Canadian small business owners are happier owning and running their own business as compared to working for someone else. Interestingly, the responses by Canadians are very consistent with their American counterparts, with slightly more U.S. small business owners describing themselves as very happy (69%).

"What the TD Small Business Happiness Index demonstrates is that small business owners enjoy a sense of control and freedom that they don't generally realize when working for someone else," says Alec Morley, Senior Vice President, Small Business Banking, TD Canada Trust. "Despite the recent economic downturn and the ongoing challenges of managing and growing a business, the personal satisfaction small business owners report illustrates one of the key advantages of owning your own company."

Why are small business owners so happy?
There are several reasons for small business owners' high satisfaction levels. Canadian small business owners say that owning a small business gives them a sense of pride and accomplishment (97%) plus a deep personal connection to their employees (91%) and their customers (84%). In addition, 86% say that owning a small business gives them the opportunity to volunteer their time or make donations to charities, sports teams and events.

The benefits of small business ownership
According to the TD Small Business Happiness Index, small business owners say the top three benefits of small business ownership are 1. being their own boss 2. setting their own schedule and 3. being in control or being able to make their own decisions. "Small business owners tell us that owning a business has many advantages, despite the day-to-day challenges that come with running a company like red tape, property taxes and attracting and retaining talent," says Morley. "If you have always dreamed of owning your own company and are interested in getting started, or need assistance in growing your small business, there are small business banking experts at TD Canada Trust branches across Canada who can help."

Happiest cities for small business owners
The TD Small Business Happiness Index analyzed small business owners' happiness levels in 12 North American cities.

Top 3 Canadian Cities
1) Calgary
2) Montreal
3) Ottawa

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Economists decry loss of long-form census

Source: Tavia Grant, The Globe and Mail, Fri Jul 30 2010

More than three-quarters of economists - from municipal planners to academics and industry advisers - oppose the federal government's proposed changes to the national census, a survey released exclusively to The Globe and Mail shows.

The Canadian Association for Business Economics poll found that 76 per cent of 252 respondents surveyed last week say they do not believe it is good policy to replace the mandatory long-form census with a voluntary national household survey.

The survey comes as a growing number of groups are speaking out against the proposed change, saying it will degrade the quality of information on everything from city planning to school sizes and immigrant income levels.

On Thursday, the Canadian Bar Association, which represents about 37,000 lawyers in the country, called on the government to keep the mandatory long form.

"There is no substitute for the census. It is the foundation of our household information set," said Paul Jacobson, vice-president of the economics association. The switch means "we're spending more money for less quality - that's the part a lot of us find offensive."

The economists' survey showed 192 economists think it's bad policy to ditch the census while 14 agree it's good policy. Four were not willing to answer, 30 didn't know and 12 did not answer.

********

DEATH OF THE LONG-FORM CENSUS

'WE HAVE TO HAVE INFORMATION'

Surveys about censuses during the height of summer may not seem a barnburner topic. But Paul Jacobson, of the Canadian Association for Business Economics, said more than a dozen economists asked to become members of the group last week so they could take part in an opinion poll about the government's decision to scrap the mandatory long-form census. The survey found that more than 75 per cent of respondents disagree with the move.

Economists use census results to track changes in Canadian life, right down to the neighbourhood level. The census also serves as the backbone upon which almost all other household surveys, including the labour force survey, are weighted. In interviews, four economists from across the country offer their views on the proposed census changes, and how it would affect their work.

ROGER MARTIN, DEAN OF ROTMAN SCHOOL OF MANAGEMENT, UNIVERSITY OF TORONTO

KEY POINT: Productivity and Canada's ability to compete globally will suffer.

If we're really going to benefit from the information age and be a player in the information age, guess what? We have to have information, and use information. I think you want to give Canadians a chance to have their economy be a sophisticated economy that uses information to its best in the information age.

The question is, are we embracing the information age or are we going backward and saying - at a time when information is getting more valuable, more useful, you can squeeze more out of it - are we reverting to a charming earlier era when we didn't use information for hardly anything, and had a less productive economy. That's the issue ...

DAVID CHAUNDY, SENIOR ECONOMIST AT ATLANTIC PROVINCES ECONOMIC COUNCIL, HALIFAX

KEY POINT: Smaller provinces will suffer.

We're focused on the four Atlantic provinces so we're always looking at data for some of the smallest provinces in Canada. The concern around going to a voluntary survey is if the response rate is small, the sample size will be small, and therefore the reliability and our ability to use it could be severely compromised.

On the industry side, we wouldn't be able to provide industries or businesses with some of the analysis that they utilize on the human resources planning and looking at the viability of production plants and strategies to attract people into that industry. We wouldn't be able to analyze the impacts of immigrant policies and how well they're working. So policy is compromised. We'll see certain indicators - like why is this population growing or declining - but we won't be able to dig in the same way on why this is happening. It sends us backward.

JOHN ROSE, CHIEF ECONOMIST, CITY OF EDMONTON

KEY POINT: We need to know if we're beating Calgary.

Any degradation in the quality of information at a precise geographic level of detail is going to impede our ability to plan for growth. So it's a very difficult problem for all municipalities. If we don't have reliable census information, we will have to do a lot of research ourselves, and it's going to be an expensive undertaking. When you sum up the costs across each community that needs to do this, it's going to cost taxpayers a whole lot more than a census.

What concerns me is the ability to compare information on an apples-to- apples basis between communities to evaluate how we're doing. How is Edmonton different than Calgary? How is Calgary different from Winnipeg? If each community has to supplement the census information, that broad-based common data set disintegrates. You suddenly find it's difficult to know not just what's going on in your own community, but to understand how you're performing relative to others. What problems do we share or what are unique?

Without that national basis, how can we possibly compare ourselves to other communities and then go back to our citizens and say we're doing a good, bad or indifferent job in planning for growth?

NIELS VELDHUIS, DIRECTOR OF FISCAL STUDIES, FRASER INSTITUTE, VANCOUVER

KEY POINT: Why all the fuss?

Certainly you can get information from other sources, and you can get it from voluntary sources. I'm confident if there's demand for the data, someone will go out and get the data.

Our school survey will not be affected. The data we present from the census on incomes ... does not factor into the actual rankings. And incomes - that information is available through other means such as ... tax returns and that's much more reliable than census data.

This is absolutely the right move because currently Canadians are being forced to disclose very detailed private information, and the government has no business forcing Canadians to disclose that. And we can collect the data through voluntary means. Absolutely you have to expend more resources [in a voluntary survey] but that increased cost should fall on the end user [such as businesses and school boards that want the data].

What do you think about these changes? Do you think they will impact your business? Share your opinions at the MerchantHub blog !

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Book reviews: Price points

Two for one: Why dropping your price doesn’t stop customer defections

Source: Andrew Gregson, Business in Vancouver July 20-26, 2010; issue 1082

Where is price in the hierarchy of retaining customers? This is 2010. We have high customer churn rates and the market is not growing for most products and services. We know that getting each new customer costs a lot of money. We know that losing a customer hurts.

Unfortunately, the default mechanism of most businesses is to drop prices and have sales. Now, having a sale is a good thing because it creates customer awareness. But is a lower price the key determining factor in where a customer opens his or her wallet?

According to Arthur Hughes’ The Customer Loyalty Solution, customers defect for wildly different reasons, depending upon what side of the service desk you stand. In Hughes’ analysis, 74% of the time customers say they don’t return to a business because of customer service problems. Business owners, on the other hand, rate customer service much lower as the reason customers don’t return (22%).

“Most people leave a company because they feel they’re not treated well,” according to Hughes. “They feel that, for some reason, they have been ignored or not treated properly. Typically they feel that they’ve been neglected or somehow abused.” Quality is seen by customers as an issue 32% of the time, while business managers rank quality as the suspect only 18% of the time.

Most strikingly, according to Customer Loyalty Solution, owners more than 45% of the time ranked price as the No. 1 reason customers defected. But customers reported that price was the factor only 25% of the time.An intriguing indicator is that, according to Hughes, “needs changed” drove 35% of customers away, while business owners saw that as being relevant only 8% of the time. Perhaps the business is out of touch with its own customer base?

What conclusions can business managers draw from these findings?
It appears that staff indifference is a greater cause of losing customers than price. So, training your staff and salespeople should be your No. 1 priority.

Secondly, if you have been driving down the quality of the service or the goods you inventory to achieve a lower price, perhaps that target needs a second look. There’s always a market for the cheapest product. Just witness the spectacular success of the dollar stores. But if there’s any expectation of a quality product or service, price is gently shouldered to the sideline.

What can you say about “needs changed” as the reason that customers do not return?
We have been exhorted for decades to learn more about our customers and their needs. In the past few years, the technology to gather the data and act upon it has become readily available. Consider Cablecom, a Swiss telecom company. It reduced customer defections from 20% per year to just 5% by crunching the data it had collected.

The company found that a customer’s decision to leave was made three or four months before the expiry of the contract, as indicated by the sudden rise in the number of customer service and support calls. So, the company offered certain customers special deals seven months into their contract and reaped the benefits.

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Will that be cash … or cash?

Source: Fred Langan, Financial Post, Friday, Jul. 16, 2010

I once stood in line at an automated teller machine behind a bank CEO who took out the cash limit on several cards. Who needs thousands of dollars in cash unless they’re paying someone under the table? Of course, cash isn’t illegal; otherwise the feds wouldn’t be printing the stuff. “It is not an offence to pay cash or receive cash for goods or services,” says Caitlin Workman of the Canada Revenue Agency.

But dealing in cash does make it easier to avoid paying taxes. And with the harmonized sales tax now in effect in British Columbia and Ontario as of July 1, more people will be trying to dodge a tax of 12% or 13% instead of the 5% they paid under GST. The Canada Revenue Agency is trying to crack down on the underground economy. It sponsored a YouTube video contest to promote the message that those who participate in the underground economy are avoiding their tax responsibilities at the expense of all Canadians, not to mention undermining the legitimate economy.

But the underground economy flourishes in a higher tax environment. There’s a theory that once taxes pass the level of 29%, people start looking for ways to cheat. Since most people keep tax cheating a secret, measuring the underground economy is almost impossible. But I would wager that almost everyone reading this has paid cash for something in the past year knowing full well that the person they are paying has no intention of declaring the income. Everyone does it. The low end of estimates for the cash economy is 4% of Canada’s GDP. The high end is 20%. J. William Pfeiffer, who wrote The Global Tax Revolt: Exposing the Raging Underground Economy, in 2000, estimated that the cash economy was around 18%.

“If anything, it’s growing. People don’t want to pay sales tax and people like me want to avoid income tax,” says a handyman and small-time renovator in rural Quebec. His is just the type of business that fuels the cash economy. So are people who mow lawns, clear snow, clean houses, care for children and fix cars. “There are some guys who don’t have a bank account. They are totally in the cash economy,” says one lawyer, who does not want to reveal his name. “There are others who mix the cash economy with the legal economy. And it isn’t just cleaning ladies and carpenters. There are dentists and lawyers who take a big slice of their income in cash.”

The people who skip paying sales and income taxes are the same ones who happily line up for free health care and other government services. People with steady jobs are the ones who find it hardest to slip outside the tax loop — when it’s deducted at source there’s little choice. It makes honest taxpayers angry, but most people are afraid to say to a cash operator, ‘Sorry, I’m paying you by cheque.’

The frustration at being cheated leads to the conversations such as the following overheard at a downtown Toronto coffee shop.
“Does your cleaning lady have a place in Europe?”
“Yes.”
“Is her husband unemployed or on workman’s compensation?”
“Yes.”
“Does she always insist on cash?
“Yes.”
“Is she at the doctor a lot?”
“Yes.”

One Bay Street merchant banker says he stopped paying cash a long time ago. “I’ve paid millions in tax. I don’t see why I should encourage people to dodge taxes. I pay by cheque and I won’t make it out to cash,” he says.

There was one tax incentive that brought a lot of outliers in the construction business back into the legal economy: the Home Renovation Tax Credit, which ended this year.
“People were declaring the expenditures they made for home renovations so they would not have wanted to pay cash,” says Eric Lascelles, an economist at TD Bank. “With so many people declaring income from the surge in renovations, it could well have brought in more tax revenue for the government than it spent on tax refunds.”

Maybe they should bring it back.

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Top 10 back-to-school trends for 2010

Source: Ellen Davis, NRF, July 29, 2010

USA - NRF’s back-to-school and back-to-college surveys were released several weeks ago. The bottom line? There’s good news, and there’s really good news: back-to-college spending will remain unchanged (remember, it stayed strong a year ago when the bottom fell out pretty much everywhere else) and back-to-school spending will bounce back to ’08 levels. All told, spending for BTC and BTS will bring in about $67 billion, once you add in our new college categories of food, personal care and gift cards.

While the overarching numbers are always important, they only tell part of the story. Here are some of the most interesting trends and nuggets I found when digging through the full report of data, provided by our partners at BIGresearch.

#1: Think K-12 is the big kahuna? Think again. I’m all about the younger ones – who isn’t? But with this huge focus on traditional back-to-school spending, we’re kind of missing the boat. For years, we’ve seen college spending outpace that of younger students and parents, though this group is almost an afterthought among reporters, analysts, and even some retailers. Why should we be paying more attention? Here’s a statistic that will blow you away: Spending on back-to-college merchandise ($45.8 billion) is twice as high as spending on back to school ($21.4 billion). Memo for the future: Ignore the post-high school crowd at your own peril – they’ve got money to spend!

#2: Don’t discount dads! In retail, we’re always talking about women: how much they spend, where they shop, ways to get their attention. But when it comes to back-to-school spending this year, dads are where the money is. According to our survey, dads of children in grades K-12 will spend $671 on clothing, shoes, electronics and school supplies. (Moms, on the flip side, will spend $545, or 25% less.) That’s good news for department stores, specialty stores and online retailers, where dads are more likely to shop. What’s the reason? Could be that dads are feeling a little more confident in the economy, aren’t planning to go all over town looking for the best deal, or just have a harder time saying no to their kids than moms. Whatever the reason, an emphasis on dads this year could pay off in a big way.

#3: The recession is over? Shoppers didn’t get the memo. Yes, the economy is in much better shape than a year ago. Yes, everyone from President Obama to Ben Bernanke has declared an end to the Great Recession. But consumer shopping behavior is hardly back to boom-time levels. According to the survey, the economy is still going to impact the back-to-school season in a major way: more parents say they’ll be buying store-brand or generic merchandise – which is actually good news for retailers with robust private label offerings – and more will be comparison shopping online. (The up-side? Fewer parents say they’ll be making do with last year’s items – after all, second graders probably can’t wear the same pair of jeans they wore to kindergarten two years ago.)

Another particularly interesting finding from the economic portion of the survey deals with lifestyle changes parents are planning to make this year. More parents in this year’s survey say the economy is impacting the type of school their child attends (8.1% this year vs. 5.7% last year) and 13.3% said they’re cutting back on extra-curricular activities or sports, up from 11.4% last year. That could have a big impact on everyone from manufacturers of school uniforms to sporting goods retailers. Why the cutbacks, when all agree that last year’s economic situation was much worse than this year’s? Maybe mom and dad could swing private school or ballet lessons last year, but now that their situation is more long-lasting or permanent, they’re pulling back in more calculated ways.

One more economic side note before moving on: we see many of these same trends play out among the college crowd, with one notable exception. This year, fewer students will be living at home as a result of the economy, which bodes well for both electronics and dorm furnishings. Students who are still holed up with mom and dad wouldn’t need their own computer or extra-long twin sheets, but the bills get higher when you leave the nest.

#4: The early bird grabs the deal. It’s not unusual for some parents to think about sending their kids back to school as soon as the final bell rings in May or June, but this year parents seem eager to begin back-to-school shopping early. In fact, 21.6% of parents plan to start back-to-school shopping at least two months before school starts, which is the highest number since we started conducting this survey in 2003. Another 47.6% of parents say they’ll start shopping at least three weeks before school starts. Of course, much of this could be based on the economy – parents want to spread out their spending or are planning to spend weeks if not months finding the best deal on a new computer. Regardless, parents will not wait until the last minute to start shopping this year, even if they’re going to wait until the last minute to pull the trigger on buying.

#5: Want to find the big spenders? Go online. Parents who are spending on the web for back to school this year will spend $266 more than parents who will only shop in stores. And with an increasing number of parents using the Internet to comparison shop before getting in their car and heading to the mall, retailers need to ensure their website is as much a representative of the company’s overall brand as their stores. (Check out the blog post by Shop.org’s Research Director Fiona Swerdlow on the topic. This is fascinating stuff.)

#6: Price is important, but it isn’t everything. I’ve heard so many retail CEOs talk about “value” this year that it’s hard to keep track of them all. While price may have been the end-all, be-all for purchasing decisions last year, parents have a bit more of a financial cushion this year to include quality, convenience and service into the mix when deciding what and where to buy. So instead of blindly grabbing the $6 blue jeans, moms and dads might be spending more on the pair with reinforced stitching or thicker denim in the hopes they last a little longer. The computer with a larger amount of memory might not be the cheapest, but it could enable parents to go several more years before having to invest in another one. That’s value.

#7: Freshmen aren’t the cash cow of college this year. If there’s one rule that a back-to-college retailer lives by, it’s this: Freshmen outspend everybody, especially on electronics. But as with a handful of other well-known assumptions, that’s not the case in 2010. According to our survey, freshmen spending will drop by an astonishing 19% – from $1,086 last year to just $882 this year – and will be only slightly higher than that of average college students. Also, freshmen will spend far less on electronics ($280) than a year ago ($439). This dramatic shift can be hard to understand – maybe freshmen plan to forgo the laptop for awhile and use the school’s computer lab, or cart away mom’s and dad’s old hand-me-down desktop until they’re sure of what they need. Maybe they’re just totally out of touch with how much college is going to cost. Whatever the reason, freshmen won’t be bankrolling college spending this year.

#8: College guys aren’t only buying electronics. Remember trend #2 about not discounting dads? The same goes for college guys. When looking at the survey’s breakouts by gender, men will spend 35% more than women on back-to-college merchandise ($965 vs. $713). Sure, you say, that makes sense – guys spend more on electronics, and those purchases tend to be more expensive. Well that’s true – guys do spend more on electronics than gals ($284 vs. $192) – but I might not be the only one shocked that men are also planning to spend more than women in traditional “female” categories: clothing, personal care and dorm décor. Clearly, there’s more than one college guy in America trying to make a good impression on someone this year.

#9: Kids are spending through their parents. There’s been a lot of talk about how historically high teenage unemployment may – or may not – impact back-to-school spending. While it’s never good news for teen retailers when high schoolers don’t have any of their own money to spend, there is a bright side. For starters, teens don’t do the lion’s share of spending for back to school anyway: the average teen will only spend about 30 bucks on BTS this year, which is comparable to previous years. And even though teens won’t be shelling out their own cold, hard cash, it doesn’t mean they’re not being heard: over 60% of parents say their children influence at least half of back-to-school purchases – on everything from jeans and school supplies to the all-important family computer. So basically, even though teens are having a hard time finding jobs this summer, they’re still doing a heck of a job spending their parents’ money.

#10: Beware of over-emphasizing the holiday implications. Ah, the age-old question: Can we look at sales expectations for back to school and apply that to the holiday season? Yes…and no. Certainly some of the behaviors outlined above – like consumers using the web more to comparison shop or being willing to try private label products – will transcend into the holiday season. Retailers can and should pay close attention to many of those trends to tweak holiday plans. But we can’t just look at back to school as a crystal ball for the holiday season. It’s important to remember that back to school is a necessity for most parents: they have to buy their kids new clothes if last year’s don’t fit. They have to follow a teacher’s school supply list to the letter. College students have to fork over hundreds of bucks for books. When it comes to holiday spending, there’s a bit more wiggle room in each family’s budget – and a lot more people spending, which can dramatically alter results.

That said, the holidays and back to school will have some things in common this year: a shopper still struggling to understand the economy, retailers experimenting furiously to discover what makes people spend, and a guarantee that – even if you think you’ve got it all figured out – you don’t.

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BRITISH COLUMBIA

B.C. retail sales growth accelerating

Source: Glen Korstrom, Business in Vancouver, Friday, 23 July 2010

B.C. retailers enjoyed the strongest year-over-year sales growth in May when compared with counterparts in other provinces, according to Statistics Canada. B.C.’s 7.5% increase in retail sales in May was only bettered by retailers in Yukon Territory, who enjoyed 8.9% sales growth.

“This is particularly exciting because we’ve been a laggard compared to other provinces for the past several months,” said Shelfspace CEO Mark Startup when Business in Vancouver caught up with him July 22. “Our growth has not been as robust as have other provinces and retailers have been concerned about that.”

Retail sales in all provinces grew in May compared with the same month last year. Saskatchewan, with 1.4% growth, saw the smallest gain. B.C. also led all provinces in growth when Statistics Canada compared sales increases from April to May. B.C. merchants enjoyed 1.5% retail sales growth between those two months. That compares with 1.2% growth in New Brunswick. Northwest Territories merchants saw the largest increase with sales improving 5.5% between April and May.

Startup said: “We heard from economists that B.C. was poised for the biggest growth in the country this year. Perhaps this is an indication that those prognostications are actually true.”

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Increase the minimum wage, kill a lot of jobs

Source: Mark Von Schellwitz, Vancouver Sun, July 20, 2010

The best safety net for British Columbians is a job. Minimum wage increases, as proposed by the B.C. Federation of Labour, put jobs in jeopardy.

Distractions, such as the B.C. Fed's recurring campaign to hike the minimum wage by 25 per cent, change the policy debate from a focus on job creation to wage inflation.
The B.C. Fed's misguided plan would impose more than $450 million in new labour costs on B.C.'s small businesses. Businesses on tight margins will have little choice but to control costs by cutting staffing hours or laying off employees. Imposing dramatic minimum-wage hikes on thousands of small businesses in B.C. would hurt the very people it is intended to help. It just doesn't make sense. Economics 101 will tell you that if the price of labour increases, employer demand for labour will decrease, meaning fewer job opportunities and less job security. This is especially true for employees who earn far more in gratuity income than wage income. For them, losing hours will translate not only into a loss of wage income, but more significantly, into a loss of tipped income.

Repackaging the minimum-wage debate into a push for a Living Wage policy is arguably even more destructive because it sets a wage floor well above the minimum wage. Beneath the branding of the Living Wage is the same concern around wage inflation. The city of New Westminster passed Canada's first Living Wage policy last year, and succeeded in artificially escalating wages and prices for firms that contract with the city. New Westminster residents can look forward to higher taxes to support the new wage policy. Before launching into dramatic Living Wage or minimum-wage hikes today, let's look into the recent past. Huge leaps in the minimum wage during the 1990s had a devastating impact on small businesses and on young people looking for work.

The first two rounds of 1990s minimum-wage hikes alone put 3,200 food service workers out of work, according to a 1995 Ernst and Young report. Unemployment among young people under the age of 25 rose to 20 per cent -- the highest rate west of Quebec. Meanwhile, youth employment grew by a healthy 10 per cent in the rest of Canada. The smart strategy is to grow the economic pie for all British Columbians to share in. New jobs, well-paying jobs and job security is the end game. B.C. families are supported, in many cases, on the paycheque of a single job. Our communities rely on strong employment. A well-paying job is by far the most important tool to keep us whole. But legislated minimum-wage hikes won't get us there.

British Columbia needs a plan focused on economic growth and job creation. The B.C. government's economic strategy over the past eight years has served us well. It helped B.C. employers create nearly 400,000 jobs, of which over 300,000 are full-time jobs. B.C. now has one of the lowest incidences of minimum-wage employees in Canada, at 2.3 per cent of all working British Columbians. In May 2010, B.C.'s average hourly wage was just shy of $23, the third highest rate in Canada and more than 2.8 times the minimum wage. Minimum-wage work is concentrated in the service sector, particularly in food services and accommodation. These sectors are largely populated by young people living at home and working their way through school.

Teenagers represent 60 per cent of all minimum-wage workers in part-time jobs, according to a recent Statistics Canada report. The vast majority of these young workers (78 per cent), kept a minimum-wage job while pursuing their studies. Clearly, government cannot generate prosperity through minimum-wage legislation. A more effective approach is carrying on with the B.C. government's strategy to help people upgrade their skills to qualify for better-paying positions. Provincial funding for trades training has increased by 40 per cent since 2001 and the B.C. government now invests more than $100 million per year on trades training. It also provides more than $39 million in debt relief to students through the B.C. Loan Reduction Program.

The advocates of minimum-wage hikes typically view the wage rate in isolation of a suite of government programs and tools to support all British Columbians and particularly low-income earners. The federal and provincial governments deserve credit for changes to the tax system that allow people to keep more of their earnings. The B.C. government significantly cut income taxes and raised the basic personal exemption to such an extent that 325,000 working British Columbians pay zero income taxes. A strategy to upgrade skills toward better-paying jobs and an economic policy that grows employment opportunities for all British Columbians will accomplish far more than a stale prescription to simply raise the minimum wage.

What are your views on issues of Minimum Wage? Share them at the MerchantHub blog and get the discussion going!

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ALBERTA

What's the real value of the Calgary Stampede?

Source: Todd Hirsch, Calgary Beacon, 17 July 2010

The last weekend of the Calgary Stampede is upon us, and just as quickly as those midway rides were set up, it’s almost time for them to pack up and leave already. Given the number of corndogs and deep fried Oreo cookies (!) consumed over the past week, a hardcore Stampede fanatic may be forgiven for saying “Yeeee-haw . . . and thank goodness it’s all over!”

Without question the Stampede is the biggest annual urban event for the city of Calgary, and among the very largest and well-known festivals in the country – and even the world. Love it or hate it, it’s a big deal. But the calculation that’s always on the minds of economists and business-types is how much economic activity does the Calgary Stampede actually generate?

Measuring the economic impact
There are a couple of ways of measuring the economic impact of the Stampede. One is simply to tally up the total dollars spent on all official Stampede-related activities, such as the rodeo events, midway ticket purchases, and food and services on the Stampede grounds itself. That alone would tally into the millions.

Add on top of that all of the extra money that is spent on non-official “Stampede” events related to the week’s festivities, such as corporate Stampede breakfasts, money spent at bars and restaurants by Stampede goers, and other parties and events throughout the city. That adds several more millions of dollars.

Finally, you could add all of the indirect money that is spent on transportation, accommodation, and other services not particularly a part of the Calgary Stampede, but linked indirectly to those travellers attending the events, especially from out of town. Millions more are added. All those Wrangler jeans and white cowboy hats aren’t cheap!

Tallying up all of the direct and indirect money spent, the Calgary Stampede Board estimates total spending of $345 million, with the majority of that ($300 million) supporting local hotels, restaurants, retail shopping and other businesses in Calgary. (It’s a lot of cash . . . but some perspective: the cost of the new Bow skyscraper in Calgary is estimated at $1.4 billion – or about four years worth of Stampedes!)

But when considering the economic impact on Calgary, it is not quite accurate to say that the Stampede represents a $345-million injection of spending into the city. A good deal of the money spent is by people living in Calgary and, in absence of the Stampede, they may have spent their recreational and discretionary dollars on something else in the city anyway. For example, a family of four living in Calgary may decide to spend a day at the Stampede, ride the C-train to the grounds, eat lunch on the midway, buy tickets for rides for the kids, and have a nice dinner at a restaurant on their way home. The whole day may cost $300, and that is attributed to the Stampede.

However, if that same family had decided to spend their $300 of recreational money on something else, it may or may not have contributed to Calgary’s economy. They could have spent that money on buying tickets to a Calgary Flames home game, or they could have gone to an event at Theatre Calgary. In each case, the total economic impact of that $300 for the city would be the same. But if they had taken that same $300 and spent it on recreation out of the country, that would represent a direct economic loss for Calgary, for Alberta, and for Canada.

The bottom line is that the Calgary Stampede does generate an enormous amount of spending during those wild 10 days in July. But many of those dollars would have been spent anyway, and if they were spent within Calgary, the Stampede cannot actually take credit for generating those dollars of economic activity.

Out of province dollars
Where the Stampede really does make a large economic impact, though, is in the out-of-province dollars it brings in. If a family from Kalispell, Montana comes to Calgary and spends $US 300 – and if that same family would never have come to the city for any other reason than the Stampede – then we know that the event is truly generating a lot of economic activity.

In the case of the Stampede, out-of-province visitors do make an enormous contribution – much more so than most other events or festivals in the country. As well, they give Calgarians and Albertans an opportunity to spend their recreational dollars here at home, rather than outside the country.
It may be a stretch to say that the Calgary Stampede generates economic activity worth $345 million, since much of that money would have been spent anyway. But the important thing is that the Stampede gives Calgarians a reason to spend money at home. It also generates civic pride, and helps put Calgary on the map for those foreign tourists.

Now, if they could just invent a fat-free, zero-calorie corndog . . .

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Big things in store as mall nears 50-year milestone

Source: Mario Toneguzzi, Calgary Herald July 29, 2010

A multimillion-dollar expansion at Chinook Centre could propel sales to a level reached by only a few shopping malls across the country and drive customer traffi c there to about 17 million people on an annual basis.

Chinook Centre, which marks its 50th anniversary Aug. 17, is on schedule for the grand opening of its 180,000-square-foot expansion on Sept. 29 and Paige O'Neill, the centre's retail property manager, said that, combined with an improving economy, should fire up consumer spending to the $1,000 sales per square foot magic number a year after completion of construction. She said only three Canadian malls have hit that level of sales.

"We're 92 per cent leased in the expansion," said O'Neill, adding that it will add 80 stores to the mall, bringing Chinook's total stores to about 260 and space in the mall to close to 1.3 million square feet. A handful of stores in the expansion area will still be under construction and will open in November or next spring. The most recent leased stores include A/X Armani Exchange, Aerie, Le Creuset, and Godiva. When the expansion is completed, Chinook will have 34 stores throughout its entire mall that are unique to this market.

As of the end of June, sales per square foot at the mall sat at $837, down four per cent from a year ago. They peaked at over $900 in 2007 when the economy was booming. As well, traffic is down by 3.8 per cent to just over six million people for the first six months of this year. O'Neill said the mall, on average, sees about 13.5 million to 14 million customer visits per year. The expansion, which will create more than 1,000 jobs, should boost those numbers to 16.5 million to 17 million. Michael Kehoe, an Alberta-based retail specialist with Fairfield Commercial Real Estate Inc., said the story of Chinook Centre over the past 50 years is really the story of Calgary in the modern era. "The shopping centre has shared the city's prosperity and is a true reflection of the style, culture and the bounty of our society," he said.

"Chinook Centre enjoys a strategic location in the centre of the trade area 'bull's eye' of South Calgary at the intersection of two of the city's busiest main arterial roadways and adjacent to the south leg of the light rail transit system -- a key factor to the success of the mall. "Beyond the great location, the shopping centre is an excellent example of the benefits of long-term stable ownership with a single management, leasing and merchandising strategy." Kehoe said the mall has an excellent mix of "entertainment, eatertainment and shoppertainment" components along with the destination anchor stores such as the Bay, Sears and Zellers.

"Chinook Centre in retail circles is known as a key destination for 'first-to-market' national and international retailers entering Western Canada," he added. While this is the second major renovation/expansion in the past 10 years or so, O'Neill said Chinook Centre is an ongoing project. "There are still future plans for Chinook Centre," she said.

- - -
Chinook Centre
- Opened Aug. 17, 1960, as an outdoor shopping mall with 45 stores
- Grand opening of expansion Sept. 29
- Expansion adding 180,000 square feet and 80 stores
- Upon completion of expansion, about 260 stores and close to 1.3 million square feet
- More than 1,000 employees to be hired by expansion retailers; about 2,000 people are now employed at the mall
Source: Chinook Centre

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Spa retailers face action over Energy Star claims

Source: Calgary Herald, Fri Jul 30 2010

The Competition Bureau said Thursday it has filed an application with the Competition Tribunal against two Alberta spa retailers and their directors over alleged false claims that their products were associated with the Energy Star Program.

The bureau alleges that, as early as 2007, businesses operating as EcoSmart Spas and Dynasty Spas made a variety of representations in the sale and promotion of hot tubs and spas, conveying the impression the products and/ or their insulation were eligible for certification by the Energy Star Program. No hot tubs, spas or insulation products for sale in Canada are eligible for certification or any other form of association with the program, an international standard for energy-efficient and environmentally friendly consumer products.

The bureau is seeking a tribunal order for directors Brent Marsall and Rochelle Marsall, and the companies in question to cease the alleged conduct, publish corrective notices and pay administrative monetary penalties. Over the past year, the Bureau has entered into nine consent agreements with other hot tub and spa retailers who had been making similar representations about their Dynasty Spas products.

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