Retailers face tough holiday season as Canadians reel back spending
Eighty-three percent of Canadians say they will be more careful about what they spend their money on this holiday season compared to last year, according to a recent KPMG survey. The consulting firm polled 1,507 Canadians in October and November.
Canadians are being more careful about their spending because of higher inflation, interest rates, and mortgage costs, the report found.
Seventy percent of Canadians say they won’t spend as much as they used to on discretionary items such as travel, apparel, electronics, entertainment, restaurants, and toys. Following from that, 66% expect to only spend on essential goods this holiday season, such as groceries, prescriptions, and personal care products.
“These financial pressures have significantly shifted spending patterns, with most Canadians opting to economize and really prioritize any discretionary purchases to what matters the most to them. But that’s about it, with seven in 10 consumers planning to cut back and tighten their belts,” said Kostya Polyakov, partner and national leader for consumer and retail, KPMG Canada.
Consumers are also frustrated with aspects of both online and in-store shopping. Though 68% of Canadians prefer to shop in-person, they say the in-store selection can’t compete with online stocks. On the other hand, 62% of consumers are “frustrated” by the online shopping experience because products are not what was advertised or because returns are too inconvenient/costly.
Loyalty programs, and the promise of discounts therein, are appealing to cash-strapped Canadians. Seventy-eight percent of Canadians are opting to shop at stores with loyalty reward programs, with 55% saying they are worth giving up their personal information.
“With so many Canadians navigating a financial tightrope and frustrated by their shopping experience, retailers need to sweeten their offers and provide a better environment,” Polyakov said. “It’s the only way that they will be able stand out from their competitors and drive sales during what’s typically a make-or-break period for them.”
