Canadian newspapers love the holiday season

Canadian newspapers love the holiday season, and not just because they can run feel-good stories about charity bake sales and personal columns about the merits of hot cocoa and snow-shoeing.

No, they love it because ad sales spike for two straight months, leaving newspapers flush with fresh revenue for a new year of production.

But in the U.S., where the first major forecasts for holiday retail sales have appeared in the past week, the 2008 season is looking less than merry.

A study by American market research firm TNS Retail Forward puts this year’s holiday sales growth at a mere 1.5 per cent, the lowest increase in since 1991.

Another by the National Retail Federation projects retail sales will rise 2.2 per cent this year to $470.4 billion in November and December, which is well below the ten-year average growth of 4.4 per cent.

"We expect consumers to be frugal this season and less willing to splurge on discretionary items," NRF Chief Economist Rosalind Wells told the Report on Business.

Deloitte Services LP offers the rosiest outlook yet – 2.5 to 3 per cent growth for the November-to-January period – but agrees that the season will prove "challenging" to retailers.

After two years of turmoil in the housing and financial sectors south of the border, with food and energy prices soaring and unemployment on the rise, the figures hardly come as a surprise.

The studies are bad news for print and radio operations in the U.S., which rely heavily on fourth-quarter revenues they earn from retail advertising. Those revenues, which fell by 2.2 and 10.3 per cent year-over-year in 2006 and 2008, will likely drop again this year.

So what, if anything, does all this mean for Canadian newspapers?

"Just because retail trends are one way in the U.S. doesn’t mean they’ll be the same in Canada," said Richard Peirce, vice president of marketing and business development at the Canadian Newspaper Association.

Peirce said that, in view of year-to-date figures, holiday retail sales in Canada are likely to perform better than those in the U.S.

In its mid-year review, Toronto-based Kubas Consultants said that "despite some softening," the Canadian economy was in good shape, with retail showing solid year-over-year growth (4.4 per cent) led by Saskatchewan (+13.8%), Manitoba (+8.1%) and P.E.I. (+8.1%), which have surpassed Alberta and B.C. as the engines of retail growth in Canada.

The report predicted "mostly steady" third and fourth quarters for retail with a "modest" recovery from the mid-year downturn expected during the holidays.

"Back in the old days, our economies were much more tied together," said Ed Strapagiel, executive vice president at Kubas. "All that’s very much changed now," he added, noting the increasing independence of Canadian resource and other sectors.

Patti Lewis, managing editor of the New Era in Melita, Man., said she expected a strong holiday season in ad sales.

"We’re up from last year at this time," she said, crediting the nearby oil sands of southwestern Manitoba and a better-than-usual grain harvest.

Advertising manager Michele Pierce of the Whitehorse Star was tentatively optimistic about holiday sales. "It’s hot and cold, up and down," said Pierce. "I’m hoping it’ll be up."

Pierce said the Star will offer discount pricing and run a special advertising supplement on Christmas Eve to drum up advertising sales.

At Metroland Media Group, which publishes about 100 weeklies and three dailies including the Hamilton Spectator, the outlook is similarly indefinite.

"Generally speaking, it’s been a tough year. It’s been a challenging year," said Kathie Braid, vice president of marketing and corporate