In any year, the holiday season is a pivotal, make-or-break time for many businesses. But this year, while retailers are working even harder to entice consumers to get in the spending spirit, a number of factors are conspiring to keep Canadian shoppers at bay.
First, there is the general consumer malaise: Many people have already been struggling with the high cost of living after unusually high inflation and interest-rate hikes in recent years. In addition, the continuing Canada Post strike may be discouraging those who like to check off their “nice” lists online, for fear that gifts may not arrive in time.
Others may be waiting for better deals: this week’s Black Friday discount bonanza falls later in the calendar than usual this year. And for certain items affected by the federal government’s recent announcement of a moratorium on sales taxes – which does not begin until Dec. 14 – shoppers have even more incentive to delay their purchases.
In short, price-sensitive shoppers are looking for deals, putting pressure on businesses to compete.
“Retailers in Canada are nervous about this holiday season,” said Marty Weintraub, national retail consulting leader at Deloitte Canada. He added: “I do think it’s going to be a pretty hot post-Black Friday shopping season, and retailers are going to have to fight extra hard to get their share.”
In its annual Holiday Retail Outlook study, Deloitte predicted that Canadians will on average spend $1,478 this festive season. That represents a 10-per-cent increase compared with last year, but it is still well below prepandemic spending.
And people are picking and choosing where their money goes: while Deloitte expects spending on travel and charitable giving to grow significantly, the report predicts gift spending to rise just 4 per cent – only modestly outpacing inflation.
“Things cost more. So it’s not necessarily buying more stuff, they just have to spend more money to get said stuff,” Mr. Weintraub said.
Retailers have been responding by advertising their discounts – and starting early. While “early Black Friday” sales are nothing new, stores are attempting to send the message that customers do not have to wait until the real Black Friday on Nov. 29 to find the best promotions.
Montreal-based outdoor e-commerce retailer Altitude Sports, for example, is advertising Black Friday pricing on more than 3,600 products on its website, with a price-matching guarantee that applies if a customer finds a better price – whether on a competitor’s site or Altitude’s own site – through a later deal.
This is important because Altitude’s customer service line has been fielding questions about whether deeper discounts are still to come.
“People are calling to know, what will the deals be on Black Friday? Should I wait?” Altitude’s co-chief executive officer, Maxime Dubois, said in an interview. He added that “for retailers, it adds pressure, because people have been trained to know that Black Friday is the time of year when they should act.”
Retailers do not want shoppers to wait, for a couple of reasons. First, healthy sales volumes earlier in the season give companies more certainty, knowing that the holidays are going to go well, Mr. Dubois said. And having a “smoother sales curve” is more cost-efficient than having to process a massive surge of orders during the few days between Black Friday and Cyber Monday, he added.
The draw of discounts is significant. Altitude also operates a website for clearance sales, called the Last Hunt: While it is a much smaller business, its sales growth has outpaced the larger website in recent years, giving a signal as to just how price-sensitive Canadian consumers have become.
It’s not the only online discounter that is gaining traction: Deloitte’s research showed roughly one-third of Canadians are considering doing some of their holiday shopping on global marketplaces such as Temu and Shein, a higher number than in previous years.
“That’s not a coincidence,” Deloitte’s Mr. Weintraub said. “It’s because a lot of these marketplaces offer value.”
In a survey of 2,500 Canadian shoppers, conducted by research firm Leger for the Retail Council of Canada, 71 per cent said they are changing their shopping habits to keep a tighter grip on their budgets, including by waiting to make purchases only when they find the best sales.
Toys “R” Us Canada has added to its usual promotional plans this year, making the sale pricing available in its annual “toy book” valid for three weeks instead of the usual two. Every weekend from October through December, the retailer is also offering additional “weekend deals” on selected products, a program that is new this year.
It is intended to help Toys “R” Us “to remain top of mind, to get on to the consideration list of the shopper and to make sure that they are looking at what we have to offer,” said Allyson Banks, the retailer’s marketing director.
Indigo Books & Music Inc. IDG-T has also been hosting events to try to prompt visits to its stores, including a 10,000 book giveaway in September. Last Saturday, Indigo advertised copies of Wicked – the novel inspired by L. Frank Baum’s The Wonderful Wizard of Oz, and the basis for the hit musical and new movie – for $10 with any book purchase.
But chief marketing officer Andrew Sutherland acknowledged in a statement that there is only so much early shopping that customers are willing to do.
“Roughly 80 per cent of holiday shopping dollars are spent between Black Friday and Christmas, so a lost week puts a lot of pressure on all areas of the business,” he said in a statement.
“Most critically, you’re pushing significant increases in customer traffic through a much tighter window, so the demands on our retail operations teams are intense.”
Retailers usually start to see customers pull back on purchases as early as October, knowing that better promotions are coming soon, Leon’s Furniture LNF-T president Lewis Leon said in an interview.
Last year, the company was caught out waiting to launch its Black Friday sales in mid-November, and had to change marketing plans on the fly when other retailers moved much earlier. This year, the stores began sales at the beginning of the month, and will continue offering those same discounts through the first week of December.
For retailers competing for price-conscious shoppers, the idea of discounts pegged to a certain day or a single weekend is a thing of the past.
“It really stretches for maybe four or five weeks, now, the Black Friday promotion,” Mr. Leon said.
