Holiday season spending expected to drop 17%! Are Canadians no longer able to buy?

It is learned that according to the "2022 Canadian Holiday Retail Outlook" survey released by Deloitte, Canadian consumers are expected to spend 17% less during this year's holiday shopping season than in 2021 due to continued high inflation and deteriorating fiscal conditions.

The average Canadian household is forecast to spend less in 2022, down from $1,841 in 2021 to $1,520. They will spend less on electronics (-55%), travel (-30%) and non-gift clothing (-27%).

The survey shows that among consumers who plan to spend less during the holiday season, 76% do so because of rising food prices, 67% because of concerns about inflation, and 60% because of concerns about the economy. Conversely, more than half (54%) of consumers plan to spend more because of concerns that prices will continue to rise.

The decline in holiday spending also reflects the huge financial challenges facing Canadians. According to the Deloitte survey, 41% of people said that their family's financial situation has declined this year. On the other hand, due to the deteriorating economy, 48% of people do not believe that their financial situation will improve soon.

Marty Weintraub, head of Deloitte Canada's retail business, said that in 2021, as the epidemic situation eased, Canadians spent recklessly. However, this holiday season, due to multiple factors such as economic headwinds, rising interest rates, inflationary pressures, the epidemic virus, and economic uncertainty, Canadians' purchasing power has shrunk significantly.

The survey found that Canadian consumers are looking for deals and discounts. Nearly half (43%) said they are willing to spend more time comparing prices, and 69% said they would prioritize buying discounted items. Another 70% said they are more likely to buy from retailers that offer the lowest prices. 72% will also give up buying a favorite brand because the price is too high.

Due to the cost of living crisis, consumer preference for sustainable/ethical brands has declined. Although 40% of Canadians are willing to pay 10% more for sustainable/ethical brands, more (60%) are unwilling to pay the extra cost, mainly due to affordability issues (47%), difficulty in identifying truly sustainable products (41%) and artificial purchases that do not make sense (28%).

Finally, Deloitte also expects that Canada's e-commerce sales will decline during this holiday season, as half of consumers prioritize shopping in physical stores rather than online. This will cause visits to Canadian e-commerce websites to return to pre-epidemic levels.

Editor ✎ Nicole/

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