Retail Trade: Ontario 2016-2018

Ontario’s retail trade employment stood at 762,000 in June 2016, making up almost 11% of total employment in the province. Retail is the second largest industry in Ontario, after health care and social assistance, and accounted for 5.0% of Ontario’s GDP in 2015. The sector includes store retailers and non-store retailers. Store retailers make up close to 98% of employment in the overall sector, and include establishments such as motor vehicle and parts dealers, electronics and appliance stores, food and beverage stores, clothing stores, general merchandise stores and gas stations. Non-store retailers generate the remaining 2% of employment, and include companies selling goods and services through non-store methods such as the Internet (e.g., Amazon), infomercials, e-catalogues, direct selling and vending machines.

The retail industry has a significantly higher proportion of youth employees compared to the rest of the Ontario workforce. One-in-three retail workers are 15 to 24 years old. This is mainly due to low educational and skills requirements for many retail positions. The greater availability of part-time work also provides flexibility for youth to work outside of typical school hours.

Competition and economics challenge growth amid mixed impacts from e-commerce

  • Stiff competition in the industry raised productivity and segmented retail into low and high-end markets
  • Recent retail spending may be curbed by consumer confidence and rising household debt levels
  • Weakness in CAD/USD exchange rate will challenge retailers but repatriate retail dollars
  • Employment growth slower but expected to return to moderate recent historical rates over 2016–2018

Sector growth outlook 2016-2018

Over the 2016–2018 period, employment in the provincial retail sector is expected to be challenged by heightened competition in retail, economic restraints on consumers, and inflation driving down profit margins for retailers.

Tightening household budgets may benefit discount retail stores and dollar stores in particular. And although not a large part of the market, luxury goods may be another bright spot. E-commerce will continue to create uncertainty in the industry as both incumbents and international, small and large retailers adjust to the impacts of online shopping.

Retail employment will grow at a subdued rate initially before returning to medium-term trend growth.

Given the size of this industry, even lower growth rates translate into a significant number of jobs. Industry employment is expected to grow by 33,800 positions by 2018.

Sub provincial trends

Toronto‘s population and density means retailers in the economic region are more likely to have 500 or more employees than other size ranges. However, they are still more likely to have 1 to 4 employees than to be small or medium-sized.

Ottawa retailers are more relatively more likely to be small or medium with 5 to 99 or 100 to 499 employees, respectively.

Across Ontario, most retail establishments employ between 5 and 99 workers, and this category was relatively most prevalent in the Northeast and Northwest regions

Due to their proximity to the US border, the retail sectors in the Hamilton-Niagara Peninsula and Windsor-Sarnia regions may stand to benefit from the strengthening US economy and lower CAD, which is likely to increase US tourism and spending in border communities.

Toronto and Kitchener-Waterloo-Barrie‘s relatively young and fast growing populations, as well as their robust economies, will likely contribute further to employment growth in their retail sectors in the 2016–2018 forecast period.

The Northwest economic region is seeing growth in its young population and in those aged 50+ which may support increased retail spending on family essentials.

More rural areas with declining populations, such as in the NortheastWindsor-Sarnia and Stratford-Bruce Peninsula, will likely see fewer employment opportunities in the sector.

Employment in tourism-dependent economic regions, such as Kingston-Pembroke and Muskoka-Kawarthas, may be supported by stronger international consumer confidence and a weaker CAD.

 

Source: Job Bank

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