How will Canadians adjust their spending this holiday season?
Despite financial challenges, Canadians aren’t ready to call it a wrap on the holiday season.
According to the 2024 Holiday Shopping Survey by Retail Council of Canada (RCC) and Leger, Canadians are projected to spend an average of $972, an 8% increase from last year. Most of the holiday budget will go to clothing/accessories and food/alcohol (16% in each category), followed by toys and games (12%), restaurants (9%), and hobbies, books and music (9%).
While Canadians may not trim their spending, they will be shopping with a careful eye on their budgets. “We’re witnessing the continued rise of what we call ‘the mindful shopper’ because Canadians recognize that prices are higher, but they are finding ways to make their money go further,” said Luc Dumont, senior vice-president, consumer insights at Leger, on a recent webinar that explored the findings.
Asked what concerns will impact their holiday shopping, the high cost of living was tops (34%), followed by budget restraints (16%) and the cost of gifts (14%). “[Mindful shoppers] are really thinking about what they’re doing and not being as impulsive or laissez-faire about their future spend,” said Dumont.
The vast majority (90%) of consumers plan to take proactive measures when planning their holiday shopping. More than half (55%) said they’ll take more time to look for deals and sales. That’s followed by setting a budget to manage expenses (46%), planning earlier to seek out the best sales and deals and compare prices (45%), use rewards programs to offset costs (39%), start shopping earlier to disburse spending over a longer time period (38%), shop at discount retailers more than previously (32%), and shop less and find other ways of giving during the holidays (30%).
READ: Canadians anticipate spending more money on groceries this holiday season
For retailers, Dumont highlighted opportunities to attract budget-conscious consumers by offering timely and attractive discounts. “You want to attract the budget-conscious consumer,” he said. “That may mean promoting value packs or bundles to increase that perception of value or savings on popular items.” Loyalty programs also have an important role. “We’re seeing in some of the data we’ve collected that loyalty programs are a very big driver in perception of value with a retailer,” adding that program members “feel like they’re saving money, which they are.”
Gift cards present another opportunity for retailers. Approximately 42% of shoppers plan to spend at least 1% of their total holiday budget on gift cards. “That indicates to us that gift cards are still an important part of the holiday buying ecosystem,” said Dumont. “Some retailers have, in some cases, given up on gift cards… [But] it’s important to have those options.”
Restaurant gift cards are the most popular choice (44%), followed by big-box retailers (37%) clothing retailers (25%), and food and beverage (including grocery) retailers.
“Consumers want to control their spend. They want to be smart about their spend,” said Dumont. “One of the actual reasons people like gift cards is that it provides them with a sense of budgeting. ‘I know exactly what I’m going to spend.’”
A key takeaway for retailers is to increase the visibility and accessibility of gift cards. “It’s important to promote diverse options to attract shoppers and actively promote gift cards,” said Dumont. Retailers are also advised to have bonus offers with gift card purchases, ensure gift cards can be used both online and in-store, and create cross-promotions between popular sectors like dining and retail.
READ: Inflation, interest rates eroded Canadians' purchasing power since 2022
Asked when they started or plan to start their holiday shopping this year, 22% said they have already started, 41% said they plan to start in November, and 14% will leave it until December.
In-store is the favoured channel for holiday shopping, with 60% of budgets going to brick-and-mortar compared to 40% which will be spent online. Adrian Bachmann, associate vice-president, consumer insights at Leger, said that figure has remained virtually unchanged since 2021. “And also, much like last year, shoppers expect to purchase holiday home entertainment items like food and alcohol, home decorations, cosmetics and clothing primarily in store,” Bachmann said.
