Canadians are cutting back this holiday season with almost half expecting the economy to worsen next year. According to Deloitte Canada’s 2022 Holiday Retail Outlook, four in ten Canadians have seen their household finances worsen this year. Consumers are cycling between cautious optimism and concern, and plan to reduce their holiday spending significantly compared to last year.
“In 2021, consumers were looking for a reason to celebrate as pandemic concerns started to abate,” says Marty Weintraub, Partner, Deloitte Canada’s National Retail Leader. “However, this holiday season consumers are dealing with worries from every angle be it economic headwinds, rising interest rates, inflationary pressures, the ‘COVID hangover’, new and reoccurring diseases, geopolitical uncertainty, and more. Across income brackets, consumers have seen their buying power shrink and they’ll be looking for ways to stretch their dollar.”
According to the survey, average household spending will fall 17 per cent this year to $1,520. Other findings include:
- The biggest spending cuts will be seen in key categories including non-gift electronics (-55%), travel (-30%), and non-gift clothing (-27%)
- One in three (37%) plan to shop earlier this year, with 46 per cent believing it will help them get better deals
- Of those who plan to reduce their holiday spending, 76 per cent are cutting down because of higher food prices, inflation worries (67%), and economic concerns (60%)
- 41 per cent of consumers plan to only buy what their family needs
- 15 per cent say they will shop and spend for themselves, down from last year.
Canadians’ trust in retailers may weaken as shoppers grow frustrated by price increases and supply chain woes. Three in four (76%) expect prices to be higher this year, while supply chain challenges have pushed consumers to find substitutes, including 61 per cent indicating they will try new brands if what they want is out of stock.
“This represents an opportunity for retailers to engage with consumers with utmost transparency and consideration,” explains Weintraub. “Multiple factors contribute to the complex state of the economy and consumers may not be fully aware of how retailers are working to offset their own increased costs. By being in tune with customers’ short-term concerns and wishes to buy goods that reflect their values, brands and retailers can create a foundation of trust that will be beneficial in the long run as the economy normalizes.”
Despite tightening budgets, the study shows consumers still want to make mindful purchases, with four in ten willing to pay more for sustainable and ethical products. Additionally, more than half say they prefer to buy gifts that support small or local businesses, while consumers in the Atlantic are most likely to buy local (71%).
According to the study, more Canadians are looking forward to getting together this year, with 41 per cent planning to host formal meals this year, up by six per cent from last year. Similarly, as concerns over the pandemic wane, half of survey respondents say they plan to prioritize shopping in-store instead of online, with average store visits expected to climb back up to just shy of pre-pandemic levels.
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