Almost half of respondents to a Deloitte survey expect the economy to worsen in the next year
The presents around the tree this Christmas may be a little smaller as Canadians prepare for economic challenges in 2024.
Holiday season spending is expected to be reduced according to a new survey from Deloitte which found that four in ten (41%) Canadians have seen their household finances worsen this year, with nearly half (47%) expecting the economy to weaken in the next year.
Consumers will slash 11% from their holiday spending this year compared to 2022 with the average household spending $1,347 and the focus will be on gifts that friends and family actually need rather than more frivolous gifts.
However, this decrease in spending is smaller than in the United States where a separate Deloitte survey found intention to cut 14% from holiday spending.
But even Canadians’ decreased gifting will require some tightening of budgets with a quarter of respondents planning to delay travel plans and a similar share reducing grocery spending to pay for gifts.
Shopping around, both at physical and online stores, will feature more heavily in buying plans this year compared to last, and returns policies will be an important part of the decision process.
"Canadians are looking for value and are willing to shop around to find it – be it online or in-store," says Marty Weintraub, Partner, National Retail Leader at Deloitte Canada. "This shift in behaviour gives retailers no choice but to rethink their value proposition and focus on providing a differentiated, seamless shopping experience that resonates with today's consumers irrespective of channel.”
Rising prices
Poll participants’ cost-conscious behaviour is driven by an expectation that prices will be higher this holiday season (76%) with most consumers believing (rightly or wrongly) that retailers have hiked prices unfairly.
Finding the best deals and on-sale items will be prevalent among shoppers but they are willing to pay a premium for products that are sustainable or do not harm the planet. This sentiment is strongest among younger consumers.
"To win over these cost and green-conscious consumers this holiday season, it's clear that brands and retailers have work to do," explains Weintraub. "While they develop new strategies to deliver real value for shoppers' money and time, they're presented with a great opportunity to invest in sustainability and educate consumers about the facts behind their products' sustainability credentials. These efforts will face increased consumer pressure in a challenging economic environment, and those retailers that navigate this successfully will be better positioned to win in the long term."
