An ice storm that left more than 300,000 homes without power in Toronto curbed retail sales on one of the biggest shopping days of the year, while providing a boost to the city’s hotels.
The weekend storm led to an 18 percent decline in shoppers at the downtown Eaton’s Centre mall, while some stores in other regional centers were closed for lack of power. About 111,000 people bought something from one of the Eaton Centre stores yesterday, compared with about 136,000 on the same day last year, according to a mall survey. Even with the power outages at homes across the city, it was the busiest day of the year for the mall, which didn’t lose power.
“The ice storm is occurring just prior to Christmas, which is usually a big weekend for consumer spending,” Paul Ferley, assistant chief economist at Royal Bank of Canada, the country’s second-largest lender by assets, said in a phone interview. “That’s where this ice storm could have a more damaging impact on the economy.”
Shops in Toronto, Canada’s financial capital that makes up 11 percent of the country’s gross domestic product, will likely bear the brunt of the storm impact, according to Royal Bank of Canada. (RY) Retail sales in the city are about C$62 billion ($58 billion) annually, according to the city’s economic development unit.
“Sometimes during weather-related events that prevent households from shopping for one weekend, they’ll then go back and offset it by stronger spending the following weekend,” Ferley said. “But in this case, Christmas purchases not made will not be made. It may result in a net loss to the economy.”
The storm will decrease monthly gross domestic product by less than a tenth of 1 percent, Ferley said.
Some outlets in the Eaton Centre plan to stay open later tonight as city crews work to restore power in Canada’s biggest city.
“Some of our retailers will extend their hours this evening to provide our shoppers with the time needed to complete their Christmas shopping,” Meredith Vlitas, spokeswoman for the mall, said in an email. The mall is open until 9:30 p.m., its regular holiday hours, and some stores including Indigo Books & Music Inc. will be open later. The mall is owned by Cadillac Fairview Corp., the real estate unit of the Ontario Teachers’ Pension Plan.
Yorkdale Shopping Centre, owned by Oxford Properties Group Inc., lost power this weekend on what is normally the busiest shopping day of the year. Some of the stores in the shopping center, which include Michael Kors Holdings Ltd. and Hudson’s Bay Co., lost electricity. Shops at Don Mills in the city’s east end lost power yesterday and remains closed today, Janine Ramparas, spokeswoman for mall owner Cadillac Fairview, said in an email.
The storm may be a boost to restaurants and hotels, which tend to see a slowdown in business over the Christmas period. Residents without power and heat are flocking to hotels, with temperatures expected to dip to a low of minus 11 degrees Celsius (12 degrees Fahrenheit) tonight.
“Normally the hotel is very, very quiet over this holiday period but it was a zoo yesterday,” said Ken Gruber, director of marketing at the Eaton Chelsea hotel, which claims to be Canada’s largest hotel, with 1,600 rooms. The hotel is just about full, with some customers lining up to check in last night with pillows in one hand and dogs in the other, he said.
“Everything from distressed air passengers-- we had about 150 distressed Air Canada passengers who couldn’t get flights that came in-- and just a ton of Torontonians with no power that didn’t want to sit in the dark and the cold,” Gruber said.
Damage from the storm may also lead to higher insurance claims after frozen tree limbs crashed down onto parked cars and rooftops.
“The ice storm that hit central Canada this weekend has caused significant physical damage and emotional trauma for many households,” said Andre-Philippe Hardy, a financial analyst at RBC Capital Markets. It will likely be a significant insured event for the industry, he said.
“In a year that’s already seen so many natural disasters in Canada, this ice storm just adds to the damage for people and the economy,” Steve Kee, spokesman for the Insurance Bureau of Canada, said in a phone interview. “It’s really too early to tell the extent of it so far.”
The remaining dangers to people and property now include downed power lines, live electric wires on sidewalks and roads, and trees falling on homes and cars, Kee said.
“The storm has impacted a lot of people -- everyone knows someone who’s without power or can’t get to work today,” he said.
Still, the storm likely won’t have a major impact on the economy overall, as consumers increase spending in the next few weeks to repair any damage.
“We do not view this storm as a major economic event and at most it will work to marginally impact the timing of economic activity in the coming weeks,” Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce in Toronto, said in a note to clients.
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