Canadians are planning on spending less over the 2020 holiday season as concerns about the country’s economic outlook and the impact of the coronavirus pandemic continue to weigh on consumers.
According to Deloitte’s 2020 Holiday Retail Outlook survey released on Tuesday, Canadians expect to spend an average of $1,405 through the 2020 holidays, a drop of 18 per cent compared to last year.
The spending decrease comes as 68 per cent of respondents reported that the COVID-19 pandemic has affected them in some form. The survey, which polled approximately 1,000 Canadians across a range of age groups, financial backgrounds and geographic regions, also found that 29 per cent of respondents have experienced a drop in household income. Another 26 per cent reported grappling with rising household expenses.
A PwC survey of 1,000 people in Vancouver, Calgary, Toronto and Montreal also found that Canadian consumers expect to spend dramatically less this year through the holiday season. The company’s 2020 Holiday Outlook found that shoppers intend on spending approximately $1,104 this holiday season, a 31 per cent drop from $1,593 reported in 2019.
Each report cited consumer concern about the state of the economy and uncertainty about the COVID-19 pandemic as factors leading to the decline in spending.
The surveys suggest that retailers, already struggling because of the COVID-19 pandemic, will face steep competition to attract customers during one of the busiest times of the year.
“This year—even more so than in past years—successful retailers will be those who can adapt and pivot as needed to a quickly changing business environment,” the PwC report said.
Retailers will also have to deal with competition from Amazon, which Deloitte said has become Canadians’ leading choice for both researching and buying gifts during the holidays. The survey found that 66 per cent of Canadians said they will use Amazon to find and purchase items, up from 60 per cent last year.
While there are many campaigns underway encouraging Canadians to shop at and support local businesses, the economic challenges brought on by the coronavirus pandemic will be difficult to overcome, said Marty Weintraub, a partner and retailer leader at Deloitte Canada.
“With 56 per cent of Canadians seeing the economy as weaker going forward, that’s a serious headwind,” he said in an interview.
“Even though we’ve seen some positive economic news over the last couple months, we are seeing headwinds now... It’s going to be tough for Canadians in general and will cause them to pause and think before they part with their money.”
Weintraub said that in order to get a share of Canadians’ limited spending money, retailers should focus on digital operations as well as making customers feel as safe as possible in stores. PwC also recommends retailers focus on optimizing their online shopping experience and prioritizing convenience, health and safety in-store.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.