* Ernst & Young sees spending up 2.5 percent
* New tax, duty rules boost cross-border competition
(Adds quotes from interview)
July 30 The crucial back-to-school shopping
season is off to an early start in Canada as retailers follow
the U.S. market's lead, Ernst & Young said on Monday.
Daniel Baer, Canadian retail industry leader at Ernst &
Young, sees spending rising "only 2.5 percent" this year,
compared with just over 3 percent last year, as cross-border
shopping and weak consumer confidence hold back sales in an
increasingly competitive market.
"Consumers remain cautious, and I think we've seen a fair
bit of promotional activity, which will keep prices down," Baer
said in an interview. "When you put it into context of inflation
and population growth, in terms of volume it's relatively flat."
Baer said back-to-school sales started at the beginning of
July in the United States, sparking an early start to the season
in Canada as well. He sees tough competition stretching out the
"It's all, I think, to try and capture as many fixed dollars
as people have to spend. The earlier you start a season, the
more likely that you're going to capture that dollar of sales,"
Lower prices and greater selection have long lured Canadians
to the United States to shop, and in recent years a relatively
strong Canadian dollar has also fueled cross-border trips.
On June 1, the Canadian government increased the amount that
Canadians can spend abroad without paying taxes or duties,
making some cross-border shopping cheaper. Baer said he expects
the new rules to boost cross-border shopping.
(Reporting by Allison Martell; Editing by Janet Guttsman; and