Agri-Food Trade Service

Content Manager's Blog

This Web site was created 15 years ago as a source of market information and export support activities for Canadian companies. As the web evolves and our interaction with clients intensifies we've decided to take a more active approach in keeping you informed with what we've published recently and to give a sneak peak at what you can look forward to in the coming months in the hopes of giving you a reason to come back and get more involved with our projects.

October 19, 2009

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This is a more traditional Blog from the ATS team, as we keep you up to date on a couple of projects that have really opened our eyes. Let's call this Blog a preview of our report "Before, During and After the Recession: Changes to American Consumer Behaviour". In researching this report we approached it with some very positive feelings as more and more information became available signaling the end of the current recession. In conducting our research we were presented with headlines like "retail sales growth in June", "markets seeing improvement", and speculative stories suggesting "the worst is over". This was all great news. Finally, we thought, an end to terrible news about current conditions, but as we progressed with the report we were taken a back by the realities of the current recession and the shift in consumer habits inside the typical American grocery store. We came across one line in particular that really summed up what we were reading; "if you can't eat it, Americans aren't buying it."

Think about the local grocery store in your area. Think about the last ten years in the sector as a whole. Grocery stores had become anything but food retailers, with electronics departments, kids clothes and outdoor living products. It seemed the bigger the store, the harder it was to find the actual food aisles, so this shift would have to represent a significant turn of events for the sector. Consumer shopping habits changed out of sheer necessity, and it appears as though the pendulum has begun to swing back towards traditional food retailing. More remarkable than that is almost every non-food item is struggling including very traditional everyday products, for example; pet food sales are down, home remedies as simple as antacids have stopped selling, and personal hygiene products have stalled. The statistics for 2008 US grocery sales have demonstrated that "if you can't eat it, Americans aren't buying it" is a very accurate assessment. If home remedies and pet food aren't selling, then what chance does a television or a patio set have in piquing consumer interest inside the typical grocery store? Needless to say it is a very interesting time in the US retail sector. Personally, I am looking forward to getting this report out there because as much as it may not be full of good news; it should paint, at the very least, a speculative picture of American shopping habits over the next two years.

I have to admit we have basically been immersed in the US retail market over the past few weeks as we continue to work at updating our regional US series. You can expect a new report on the retail sector in the US Pacific Northwest and one from the opposite end of the country, the US Southeast, two markets that seem to have a brighter present and future than many US markets.

While the US market has occupied a great deal of our time recently, we have been watching development in some of Canada's other largest export markets, specifically Japan. The weak US dollar and strong Yen are causing considerable problems for Japan's export economy; additionally the strong Yen has caused a number of unexpected problems for Japan's domestic market.

Japan's largest companies (Sony, Honda, Panasonic, Toyota etc.) have reported that the recent large gains of the Yen against the US dollar have cost the economy some US$12 billion. This is based on Toyota's estimate that the impact of currency fluctuations is roughly US$400 million per 1 Yen increase against the US dollar. The Yen has moved from its more traditional level of 110 – 120 Yen = US$1 to a near record high of 87 Yen = US$1.

While this situation has deeply affected the country's export market the government had hoped that the strong Yen would help the domestic economy by pushing consumption at home. However, over the last four months Japanese consumers have proven to be very reluctant to spend, in Japan at least. The country reported a record decline in the core consumer price index of 2.4% for the month of August. Retail prices have been falling across the board and there is a real fear that deflation may return to Japan. While this all paints a picture of a reluctant consumer, in fact, it seems that Japanese consumers have been increasing their spending, just not in Japan. More and more Japanese consumers are taking their strong Yen to Korea. Korea's tourism board has reported that shopping tours from Japan increased by 61% in the first quarter of 2009, and while they fell a bit in May and June, both July and August saw near 30% increases over 2008. The strong Yen is going much farther in Korea and Japan's newly confident consumers are apparently looking for deals.

These Blogs have led to quite a few new enquiries, and we are committed to sharing universal or relatable comments, so please get involved.

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Until next month.

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