Holiday spending in Canada is expected to drop this year as inflation shrinks consumer buying power and economic uncertainty looms, a new report says.
In its 2022 Holiday Retail Outlook, Deloitte Canada said Tuesday (Oct. 18) overall holiday spending is expected to fall 17% to $1,520 per household as recessionary concerns and higher interest rates rein in budgets.
Canadians are also planning to shop early and hunt for deals in a bid to stretch their spending power, Deloitte said.
"Shopping is going to be earlier and deal hunting will be probably at a bit of an all time high as Canadians look to stretch their holiday budget,'' said Marty Weintraub, a partner and national retail consulting leader at Deloitte.
The report, based on a Leger survey of more than 1,000 Canadians conducted in late August, found more than a third of respondents plan to start shopping earlier than last year.
Retailers appear to be responding by rolling out Christmas-themed products earlier. The so-called Christmas creep in retail has resulted in many stores featuring holiday goods as early as September, often overshadowing Halloween.
Some stores are also introducing holiday promotions and deals earlier in the fall.
Amazon Canada, for example, introduced the Prime Early Access Sale last week, offering Prime members a two-day shopping event.
Meanwhile, Black Friday – a massive retail event that once signalled the start of holiday shopping for many consumers – is increasingly how many Canadians plan to close out their seasonal spending, the Deloitte survey found.
“We saw quite a big jump in terms of how many Canadians will complete their shopping by Black Friday,'' Weintraub said.
The poll found 26% of respondents will finish their holiday shopping on Black Friday, up from 18% last year.
“All the retail seasons over the past few years are getting earlier,'' Weintraub said. “The retail market is competitive.''
The planned reduction in spending this year is unusual compared with conventional retail trends, he said.
“Canadians are telling us they're going to be reducing their spending, which is not typical,'' Weintraub said. “We've seen it typically increase year over year, except in 2020.''
The Deloitte report said 76% of Canadians polled said they are reining in holiday spending because of higher food prices, followed closely by inflation worries and economic concerns.
The report found the drop in holiday spending reflects the financial challenges of Canadians, with 41% saying their household finances have declined this year.
That figure is slightly higher in Atlantic Canada, where 52% of survey respondents said their household finances have waned this year.
The report suggested the tougher economic times could be a boon for discount stores.
"The value-oriented retailers that compete on price ... are clearly positioned to take market share right now,'' Weintraub said. "Likewise, retailers in the luxury space that serve the 'one per cent' will be OK.''
It's retailers in the "mushy middle'' that don't appeal to bargain hunters or high-end shoppers that are going to feel the pinch, he said.
"If you're in that mushy middle, I think it's going to be much more challenging.''