Millennials and Gen Z are set to outspend older Canadians, boosting retail sales
Canadian retailers are preparing for a spending surge during the 2024 holiday season, driven by younger shoppers, according to the PwC Canadian Holiday Outlook Survey.
The survey highlights a clear generational divide, with Gen Z and Millennials set to significantly outspend older Canadians.
Gen Z plans to spend an average of $2,296, while Millennials expect to spend $2,233, marking increases of 55 percent and 51 percent over last year.
Their growing disposable incomes, as Gen Z enters the workforce and Millennials advance in their careers, are contributing to this increased spending on gifts, travel, and entertainment.
In contrast, Gen X and Baby Boomers are reducing their holiday spending. Gen X expects to spend $1,766, down by 11 percent, and Baby Boomers plan to spend $1,412, reflecting a 9 percent decrease. This cautious approach from older Canadians has resulted in decreased spending across all categories.
“Retailers across Canada are poised to benefit from a clear spending surge from younger Canadians this holiday season, despite the affordability challenges that make headlines every day,” says Elisa Swern, National Retail and Consumer leader at PwC Canada.
She advises retailers to align their strategies with the values and buying preferences of younger shoppers, such as prioritizing quality, sustainability, and embracing digital payment platforms.
Canadians, on average, estimate that they will spend $1,853 on gifts, travel, and entertainment during the holiday season, reflecting a 13 percent increase from last year.
As inflation and interest rates decline, 65 percent of Canadians believe the economy will stabilize or improve in the coming months, up from 48 percent the previous year.
Regionally, respondents from the Prairies and British Columbia expect to spend the most this holiday season, estimating their spending at $2,188 and $2,126, respectively. Quebecers are projected to spend the least, with an average of $1,474.
Despite the overall increase in planned spending, many Canadians do not have the cash to support these expenditures. Thirty-one percent of Canadians say they will dip into their savings to fund holiday spending, with 32 percent of Quebecers following this approach.
Retail financing options are gaining traction in Ontario and Quebec, where 19 percent and 18 percent of respondents, respectively, plan to use them. Additionally, 20 percent of Ontarians report that they will take on more debt.
The survey identifies several trends businesses should consider during this holiday season. Many Millennials, Gen X, and Baby Boomers indicate they would switch to brands that offer better loyalty program perks to gain more value for their money.
However, loyalty programs do not resonate as much with Gen Z consumers, who prefer to stretch their money by purchasing higher-quality items, using retail financing options, and buying second-hand products.
Gen Z shows a clear preference for giving physical gifts over gift cards, with apparel, cosmetics, toys, and alcohol among their top choices. This generation's preference for tangible gifts reflects their desire for personal connection and thoughtfulness in their gift-giving.
Additionally, Gen Z is leading the adoption of digital payment methods, with 44 percent using PayPal, 35 percent using Apple Pay or Android Pay, and 11 percent opting for buy now, pay later platforms.
Gen Z is also more likely to finish holiday shopping early, with 21 percent planning to complete their purchases before Thanksgiving, compared to just 11 percent of shoppers overall.
Younger generations, particularly Gen Z and Millennials, also prioritize sustainable and ethically conscious brands. Retailers that communicate and market their products as sustainable and ethically sourced can appeal to these shoppers and encourage spending.
