As the holiday shopping season fast approaches, retailers across Canada start to look forward to increased spending and greater opportunities to engage with their customers
BY SEAN C. TARRY
IT’S an exciting time of year to be living in Canada. The bustle of back-to-school has completely faded into the background. Thanksgiving leftovers are now a fleeting memory. Everywhere you look, despite where you might live across the country, trees are bursting with colour; their branches slowly starting to shed their leaves to make way for the colder climes of Winter. And these things, either viewed separately or together, represent one thing to retailers operating in Canada: the approaching holiday shopping season.
It can’t get any more exciting than this, right? Well, according to the 2018 Canadian holiday outlook developed by PwC Canada, there may be reason for retailers in Canada to be feeling a little more cheery than usual this coming holiday season.
The outlook analyzes consumer behaviour and, the trends driving their behaviour. The annual report always serves as an indication for the Canadian industry concerning consumer sentiment around this time of year and goes a long way toward providing some perspective around the holiday shopping season. And, for 2018, all indications are pointing toward the positive.
“The underlying data is showing that retailers in Canada can expect a holiday shopping season as good, or an even better, than last year,” says Myles Gooding, National Retail & Consumer Lead, Consulting Partner, PwC Canada. “Given the positive economic indicators that we continue to enjoy in Canada, in combination with the Millennial group starting to take a leadership role in terms of the amount of money being spent, we’re going to have a pretty good holiday season.”
Planning increased spend
According to PwC Canada’s outlook, Canadian consumers plan to spend slightly more than they did last year, hitting an average of CA$1,563 each (up 3.7%). In addition, more Canadians anticipate their holiday outlay to stay the same as the year before (58% in 2018 vs. 53% in 2017). There are some traditional factors that play a part in this analysis, none more prevalent than consumer economic confidence, when it comes to holiday spending growth. Those who think the economy will perform better over the next six months are likely to spend more than those without the same optimism. There are some timely factors that will influence consumer behaviour as well, such as trade protectionism, with 28 per cent stating that it could affect their spending this holiday shopping season, up 6 per cent from 2017. However, there are other trends that are centered more around the consumer themselves that are playing a part in shaping how the 2018 holiday period might look.
Millennials taking charge
The generational divide with respect to the spend forecast for the different demographics that make up the Canadian population is one of these trends. Although only a quarter of consumers plan to spend more this season over last year, more millennial dads (53%) and Gen Z consumers (39%) are upping their budgets. Millennial parents are also among the top spenders.
“Mature Millennials, those who are now having families of their own and who are moving forward in their careers, are making more money today,” explains Gooding. “They have more income to work with now. That’s the major factor fueling the generational divide with respect to spending. When you compare this to years past, the Boomer generation was driving a lot of the spending and behaviour because they had more purchasing power. But, what we’re seeing today is the mature Millennial starting to possess higher spending power and leveraging it. They’re starting to take charge of the economic scene and drive the economy.”
PwC Canada’s outlook also highlights the fact that, although much of the spending this holiday season will be reflected in travel and gift cards (46% and 41% respectively), Millennials also like to give and receive physical gifts. And, what’s more—despite the continuing rise of the e-commerce channel, Millennials prefer to shop for their gifts in brick-and-mortar retail locations.
“When you look at the channels available to customers, Millennials tend to use online more often,” explains Gooding. “However, what’s interesting is that in the case of holiday shopping, this group might simply use it for price or product comparison on their brick-and-mortar journey. They want to shop in physical retail locations.”
This, continues Gooding, presents retailers operating in Canada with huge opportunities to engage with their customers and attract their spend this coming holiday season by giving them what they want. And what might that be?
“An exceptional experience,” says Gooding. “Retailers know now that they have to concentrate on all of their available channels. It’s not one over the other. But, for those looking to capitalize on the traffic that will be visiting their stores this holiday season, they need to really focus on the experience that they’re offering their customers. It really comes down to basic retailing 101. And the retailers that will succeed this holiday season, and beyond, understand that they need to provide their customers with an experience in-store that is unique and compelling, something that will encourage their spend and their repeat business.”
BUYERS BOOST BUDGETS
The estimated average Canadian consumers plan to spend this holiday season, up 3.7% from last year.
Millennial parents are anticipated to be among the top spenders this holiday season.
The estimated average spend for Millennial parents this holiday season.
Seamless across channels
Canadians love to shop in-store with nearly two-thirds considering brick-and-mortar retail their primary holiday shopping channel.
Percentage of Canadians who will prefer to shop in-store this holiday season as opposed to other available channels.