Canadian duty-free sales down by 10% in 2006

Emily Pacey

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Canada’s airport and land border store retailers sustained significant losses in 2006

Total sales at duty-free stores along the US-Canadian land border declined by 8% to reach C$160m ($136m) in 2006 compared with the previous year. The fall represents a loss of C$14m ($11.9m) to the regional industry over the course of 2006. Retail sales at Canada’s airports decreased by 12.63% in 2006 compared with 2005, reaching C$152.7m ($129.4m) compared with the previous year. During December they fell by 11.35% compared with December 2005, to reach C$13.3m ($11.3m).

Sales at border outlets in December dipped by 8.4% to reach C$12.8m ($10.8m). Fur items fell furthest by 40.72%, followed by arts, crafts and carvings, sales of which declined by 26%. Glassware and crystal sales dropped by 21.4%. Souvenirs fell by 10%. Of the core categories, fashion sales fell by 12.4%, tobacco by 10.37%, fragrances and cosmetics by 9%, jewellery by 7.76%, liquor and wine by 6.24%, beer by 5.8% and confectionery by 5%. Leathergoods showed the only sales growth during the year, up by 9.24% compared with 2005. During December 2006, the only categories that showed an increase in sales were leathergoods and souvenirs.

In the Prairie region, sales fell by 2.87% during the year, while in the Pacific region sales declined by 2.73%. Sales in the Atlantic/Quebec  region dropped by 10.12% and sales in the Ontario region fell by 9.56%.

Consolidated sales for both airport and land border stores dipped by 10.32% overall during the year, and by 5.1% in the first half of 2006 compared with the same period the previous year. Fur items once again showed the greatest decline, down by 40%, while liquor sales fell by 10.95%, beer by 5.91%, tobacco by 8.42% and fragrances and cosmetics by 12.81%. Jewellery sales showed the only growth, rising by 6.25% in 2006 compared with 2005.

The dramatic falls in sales in 2006 coincided with the abolition of a valuable visitor tax rebate scheme, as well as confusion over the introduction of the passport law which discouraged many US visitors from crossing the border.