2016 concluded with what is expected to be modest sales growth. Retailers face the prospect of moderate gains in 2017 amid less traffic in physical stores and more focus on e-commerce. Further volatility with the Canadian dollar, economic uncertainty south of the border, and a domestic economy that seems to be stuck in low gear is keeping retail executives up at night as online commerce is forcing a complete rethinking of their business model.

Omni-channel makes up less than 10% of traditional retail sales but omni-channel’s growth rate has averaged three times that of traditional retail. Every aspect of retail operations will have to be reassessed and changed in significant ways. Retailers have to re-think their whole operations model from logistics, to fulfilment and stores.

Many merchants are hoping for a stronger economy in 2017 to lure customers. In some segments like luxury fashion, grocery and discount/off-price, they will operate in an increasingly crowded market while facing the growth of Amazon.com which is widely viewed as a major threat. The Retail Council of Canada in their recent conditions report highlighted increasingly steep traffic declines that are forcing some retailers to consider shutting or shrinking underperforming stores, which could touch off a reshaping of the industry. Most retailers are projecting that sales in 2017 will pick up in the low single digits – between 1-3%.