Canadians could be spending less this Black Friday
This Black Friday, reports and experts say, Canadians will be spending less money on “luxury” items and gifts, and will be looking for deals on “essentials” instead.
The holiday season is ramping up across the country, with many people looking to bargain hunt on Black Friday. Experts and reports, however, say the cost of living is the main reason Canadians are likely to spend less this year.
“Consumers are sort of a little stingy this year, more than normal,” Bruce Winder, a retail analyst, told CTVNews.ca in an interview. “They’ve sort of spent quite a bit the last couple of years after the pandemic and burned up all that savings money…So they’re going to be cautious.”
Canadians are pinching pennies in all aspects, including food, shelter and other costs that have increased over the last several years.
HOW MUCH WILL CANADIANS SPEND?
Estimates on whether Canadians will increase or decrease their spending this Black Friday are mixed, reports show.
A new report by Boston Consulting Group (BCG), a financial consulting firm, says Canadians are increasing their Black Friday spending to an average of $415. In some markets, like the U.S., people will be spending closer to US$460.
The group polled 7,000 people from countries across the world including 1,017 Canadians. It shows across the board consumers globally will exceed 2022 spending by as much as 22 per cent.
However, a Canadian report by Deloitte, a financial management firm, shows shoppers will be decreasing their spending this holiday season.
According to the report published last month, Canadians are expected to spend per household on average 11 per cent less this holiday season, which includes Black Friday and the month of December.
“I mean, you never really know, right? No matter who you talk to,” Winder said. “It depends on how sharp some of the offers are, or how consumers feel. If I was a betting person — which I’m not — I would probably say that it’s going to be down a little bit.”
WHAT ARE CANADIANS BUYING?
Reports and experts agree that some Canadians’ spending power is likely to be hampered by the cost of living. This factor is also dictating what sort of items consumers will be buying this Black Friday, reports show.
BCG’s survey says 70 per cent of Canadian consumers plan to take advantage of deals on Nov. 24.
Just over half (60 per cent) of Canadians will be looking for deals no later than November, planning purchases and doing research in advance, the report notes.
However, the report finds that it won’t necessarily be gifts Canadians will be buying this Black Friday.
“Canadians are now turning to these once ‘holiday gift-focused’ moments as opportunities to stock up on essentials,” the report reads.
Kathleen Polsinello, managing director and Canada system leader at BCG, said she believes people are waiting for prices to be slashed.
“I have clients (that work) in a lot of non-essential categories, like jewelry, like clothing, who are saying the fall has been very soft,” she told CTVNews.ca in an interview. “And I think that’s because people are waiting, they’re waiting for the deals.”
The Deloitte report notes a similar trend in buying “needs” versus “wants.”
“Nearly half of Canadians (48 per cent) intend to buy only what their family needs this season (vs. 41 per cent in 2022),” the report reads.
To pay for the increased holiday expenses, one in four Canadians plan to postpone vacations or cut back on grocery spending, it notes.
“It’s a unique year because consumers were pretty buoyant even this time last year,” Winder said. “This is, I think, the first year that people are toning it down a bit and really saying, ‘Okay, I’ve got to tighten things up.'”
According to BCG’s report, clothing is the most popular category in Canada to shop for with electronics coming in second.
Canadians are likely to buy essential items at a discount retailer the report reads, and more people will choose “accessible/more affordable brands.”
However, the data shows younger generations plan to spend more on Black Friday, which is due to a budget for luxury or higher priced items to “treat themselves on a bargain.”
WHAT DEALS ARE CANADIANS LOOKING FOR?
When looking at sales on Black Friday, Canadians will be expecting personalized offers to incentivize them further, Sander Meijers, the Canada Manager for Adyen, a credit card transaction company, said.
“It’s very successful to not just give another discount to pull people into online shop or your store, but to really give something personalized on top of that,” Meijers told CTVNew.ca in an interview. “That’s what gives the shopper the feel that you really know who they are.”
For example, he said, an email offer of 10 per cent on top of a Black Friday deal rewards the customer for being loyal.
“Don’t spray and pray with deals,” Meijers said, adding Canadians aren’t going to buy something because it’s on sale, but will “want to buy with a brand that knows (them) and offers something relevant that’s cheap during this period.”
According to BCG’s report, Canadians are “most attracted” to messaging that reads “Up to 50/60% off entire store.” When shopping, the report notes, Canadians expect a minimum of 30 to 40 per cent off, especially for clothing.
Adyen, which analyzed 40 billion transactions from companies across Canada, found there is a focus on the sale number, Meijers said.
“I would say, high level, our research says that it’s even more important to find a bargain than it used to be,” he said.
It’s not just Black Friday where Canadians are looking for deals, Meijers said. Adyen’s retail report for 2023 notes this was happening all year. Meijers said Canadians will be looking for a “hybrid” approach when it comes to Black Friday deals, shopping both online and in-store.
“People want to go shopping, make a nice day out of it,” he said. “And stores that have super cool experiences that add something extra to offer while shopping were very successful (last year.)”
This article was reported by CTV News
