Value for money top of mind for cost-conscious consumers

Toronto, October 17, 2023 – As they face ongoing financial pressures, Canadians will reduce their holiday spending this year. According to Deloitte Canada’s 2023 Holiday Retail Outlook – The weight of the season: Financial strain expected to curb holiday spending, four in ten (41%) Canadians have seen their household finances worsen this year, with nearly half (47%) expecting the economy to weaken in the next year. As a result, they will be cautious, savvy and selective this holiday season, looking to shop around widely to find the best deals and get the most value for their money.

“Canadians are looking for value and are willing to shop around to find it – be it online or in-store,” says Marty Weintraub, Partner, National Retail Leader at Deloitte Canada. “This shift in behaviour gives retailers no choice but to rethink their value proposition and focus on providing a differentiated, seamless shopping experience that resonates with today’s consumers irrespective of channel. Every touchpoint along the customer journey is an opportunity for retailers to deliver value—whether it's competitive pricing, product availability, fast checkouts, free delivery, easy returns, or personalized promotions.”

According to the survey, average household spending will fall 11 per cent this year to $1,347. Other key findings include:

• Nearly half of Canadians (48%) intend to buy only what their family needs this season (vs. 41% in 2022). To pay for their holiday purchases, one in four consumers plan to postpone travel plans (24%) or cut back on their grocery spending (23%).
• Canadians are willing to go the extra mile–literally–to get the most value for their money. They will visit an average of 16.5 stores and websites this season, up 37 per cent from last year.
• Consumers plan to shop for gifts at Amazon (69%), mass merchant retailers (61%), and warehouse membership clubs (40%).
• This year’s season shows signs of stagnation in e-commerce growth as consumers plan to spend 41 per cent of their holiday budget online (vs. 55% in stores), plateauing since 2021.
• For those who shop online, returns matter: 57 per cent say retailer return policies influence where they shop.
• There will be notable decreases in charitable donations (-40%), gifts (-18%), and gift cards (-14%) this year.
• One in four (26%) consumers plan to treat themselves to a concert, spa, sports event, trip, or other experience, and holiday spending on travel is expected to rise 11 per cent over last year.

Consumers’ trust in retailers is being challenged

Canadians will be making tough decisions and tradeoffs, and searching high and low for the best deals. This cost-conscious behaviour is driven in part by the widespread (76%) expectation that prices will continue rising this holiday season. Consumers also suspect, rightly or wrongly, that retailers have been increasing prices unfairly (73%). This figure is higher than last year (68%), signaling that Canadians’ trust in retailers may be starting to falter.

In response to price increases, Canadians will be shopping around for the best deals (77%) and looking for on-sale items (71%). However, financial and economic worries haven’t dented shoppers’ commitment to sustainability, with more than half (55%) claiming they are willing to pay a premium for products certified as socially compliant, sustainable, or produced by factories that engage in employee well-being initiatives. This preference is more likely among those who are younger (65% of those aged 18 to 34 vs. 47% of those aged 55 and older) and female (60% vs. 49% male). On the other hand, while seven in 10 (70%) Canadians believe retailers should be responsible for creating and selling products that don’t harm the planet, nearly half (44%) question retailers’ sustainability claims.

“To win over these cost and green-conscious consumers this holiday season, it’s clear that brands and retailers have work to do,” explains Weintraub. “While they develop new strategies to deliver real value for shoppers’ money and time, they’re presented with a great opportunity to invest in sustainability and educate consumers about the facts behind their products’ sustainability credentials. These efforts will face increased consumer pressure in a challenging economic environment, and those retailers that navigate this successfully will be better positioned to win in the long term.”

Learn more about the 2023 holiday retail outlook here.