Deloitte: Average holiday shopper expected to boost spending by 31%

Canadians expect to spend an average of $1,841 this holiday season - up 31% from 2020’s $1,405 and up 8% from 2019’s $1,706 - according to Deloitte’s annual Holiday Retail Outlook survey. 

“As we continue to emerge from the challenges set by the global pandemic, Canadians have proved themselves resilient, and are now looking to celebrate and spend their hard-saved dollars, which should bode well for retailers,” said Marty Weintraub, partner and national retail practice leader at Deloitte Canada.

However, the pandemic and the nascent economic recovery have had varying impacts on the fortunes of Canadians and their holiday shopping plans. Broadly, the rich got richer and the poor got poorer.

One-third of Canadians feel their financial situation has improved over the past year, and 43% were able to increase their savings. Canadians who have fared well during the pandemic tend to be male, live in Ontario, have a household income of $100,000 or more, and are employed full-time. Higher-income Canadians have benefited from the unending real estate bubble, strong financial gains in the stock market, and the accumulation of savings during the pandemic. These consumers will spend an average of $2,118 this holiday season, 15% more than the average, according to Deloitte’s research.

Of those who plan to spend more this holiday season, 46% said they're doing it to spoil family and friends after a challenging year. Meanwhile, 34% said it's because things cost more now, and 26% said it's because their household finances improved.

Nearly one-fifth of Canadians found the pandemic to be financially challenging and were unable to increase their savings. These consumers tend to be female, live in Ontario or in the West, have an average household income of less than $50,000, and are likely to be temporarily unemployed. Lower-paid workers in sectors such as food services, accommodation, and non-essential retail have disproportionately borne the brunt of pandemic job losses and have struggled to recover. Deloitte’s report expects these consumers will spend an average of $1,400 this holiday season, 24% less than the average.

Of those who plan to spend less on the holidays, 36% said their personal household financial situation is worse and they are focused on saving instead of spending. The inflationary demon is further pressuring cash-strapped Canadians, with 60% cutting spending because of higher food prices, 46% pointing to increases in cost of transportation, and 37% citing rising cost of housing and home energy.

Supply chain issues and shortages, which have contributed to rampant inflation, will also encourage consumers to get their shopping finished early this season. Thirty-five percent of consumers plan to begin shopping before November, 14% expect to complete their shopping on Cyber Monday, and 65% expect to finish their shopping in December - down sharply from 75% in 2019.

Amazon will remain the top shopping destination for Canadians (62%), who are increasingly seeking a “frictionless” experience, according to Deloitte. Forty percent of Canadian consumers are now Amazon Prime members, up from 37% last year. 

Half of consumers (49%) still say they prefer to shop in stores for holiday purchases, spending 55% of budgets at bricks-and-mortars. Rather than seeking “holiday magic,” shoppers are going to physical stores to avoid shipping costs (56%), interact with a product (55%), and facilitate easier returns (43%).

“Since the start of the pandemic, retailers have made significant strides in engaging consumers by increasing their online presence and tapping into social media, but there’s no denying the fact that the physical store is increasingly becoming more of a transactional experience,” added Weintraub. “While it’s yet to be determined whether this is a temporary shift in response to the ongoing pandemic, it is indicative of Canadians’ continuing migration to online shopping.”