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Canadian consumers still feel like it's a recession, says Nielsen

Promotions and deals still driving most people's buying habits

Five years after the world's economy melted, consumer confidence is up in emerging markets around the world, but Canadians remain a cautious lot.

According to a Nielsen report released this week, Canada’s confidence level sits at a score of 98, which is higher than the U.S. and Europe, but still down four index points from last quarter.

“When we asked consumers what they’re doing with their spare cash, the general consensus is that they are saving more then spending,” said Carman Allison, the report’s lead author and director of  consumer insights at Nielsen Canada.

The report says 38% of Canadians are using spare cash to pay off deb. Another 18% have no spare cash.

“And for our industry , they’re spending 2% less per household compared to last year," the report said.

Cautious consumer spending, coupled with increasing competition from U.S. discount chains such as Target, has kept retailers focused on prices, Allison said.

“As a consumer, if I want to save money–and 60% of us do want to save–it’s easy for me to do that now,” he said. “We also see consumers tending to focus on deals and promotions.”

Not surprising, the discount format continues to expand. Discount stores capture 39% of retail dollars nationally and theuy're expected to reach 43% by the end of the year.

Allison said retail sales going through checkout at a price cut are at an all-time high at 37%, compared to 27% prior to the recession in 2008.

“Obviously having those aggressive price points and deals are going to be a way to get consumers in the store,” he said.

But the statistics also showed a “polarization among consumers,” acording to Allison.

The higher the household income the more confident people are about the economy and their finances.

Young, high-income earning males, for example, are more bullish about the economy, compared to the 55-year-old pre-retirement set or even their female counterparts.

As a result, Allison said that the “premium” sector is looking promising, with retailers like Whole Foods exceeding expectations and Toronto chain Longo’s continuing to expand storefronts.

“These retailers are focused on service, quality and selection to meet the needs of certain groups of consumers–and they’re charging higher price points.”

It’s those retailers stuck in the middle who are losing the most battleground, said Allison. “It’s the conventional stores that are struggling and they’re either discounting or having to change into premium stores to differentiate themselves,” he said.

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