Canadians expect the economy to worsen in 2023 and plan to spend less this holiday season, according to a new poll.
The survey by Deloitte, a consulting, financial, and risk advisory firm, says Canadians are “skeptical, concerned, and craving attention” coming into the first Christmas season without any lockdowns or restrictions in a couple of years.
Although more people will be hosting formal holiday meals this year, Deloitte predicts average holiday spending to fall 17 percent this year to $1,520. The most significant spending decreases are expected in non-gift electronics, travel, and non-gift clothing.
With inflation and elevated interest rates, 40 percent of Canadians have seen their household finances worsen this year.
The most popular reason for reducing holiday spending is high food prices, the poll showed. Inflation and economic concerns were also popular reasons for spending less. Forty-one percent of people said they plan to only buy what their family needs.
‘Worries From Every Angle’
Marty Weintraub, Deloitte’s national retail leader, said people were spending more last year as their pandemic concerns were diminishing.“In 2021, consumers were looking for a reason to celebrate as pandemic concerns started to abate,” Weintraub said in the release.
“However, this holiday season consumers are dealing with worries from every angle be it economic headwinds, rising interest rates, inflationary pressures, the ‘COVID hangover’, new and reoccurring diseases, geopolitical uncertainty, and more. Across income brackets, consumers have seen their buying power shrink and they’ll be looking for ways to stretch their dollar.”
The average amount spent on travel or vacation will be $239, down 39 percent from last year. The average spent on gift cards is $120, down 24 percent from last year.
“As concerns over the pandemic wane, half of survey respondents say they plan to prioritize shopping in-store instead of online, with average store visits expected to climb back up to just shy of pre-pandemic levels,” the release said.
Deloitte says Canadians are becoming less trusting of retailers because of price increases and supply chain problems. More than 75 percent of Canadians expect prices to get higher this year, and over 60 percent said they would turn to different brands if the ones they want are out of stock.
“This represents an opportunity for retailers to engage with consumers with utmost transparency and consideration,” said Weintraub.
“Multiple factors contribute to the complex state of the economy, and consumers may not be fully aware of how retailers are working to offset their own increased costs. By being in tune with customers’ short-term concerns and wishes to buy goods that reflect their values, brands and retailers can create a foundation of trust that will be beneficial in the long run as the economy normalizes.”
Over half of the respondents said they prefer to buy gifts from local or small businesses. In Atlantic Canada, 71 percent said they buy local, the highest in the country.
Forty percent said they are willing to pay more when buying from companies selling ethical or sustainable products.
