TORONTO — We are spending less and yet giving more this holiday season.
The Bank of Canada has confirmed what many small business owners will tell you: business sentiment is weak, hiring plans remain modest due to elevated uncertainty around COVID-19 and sales prospects are limited by weak demand and health restrictions.
This doesn’t suggest a rosy holiday season for retailers, with an uneven recovery, job losses continuing to mount and consumers that can’t support their spending habits of the past.
There is little doubt that retailers in Canada continue to struggle. And depending on the severity of the second wave of COVID-19, businesses on the brink of financial ruin may be finished off if the holiday season doesn’t add an element of financial support to their bottom line. Many businesses count on the holiday gift-buying season to help them turn a profit for the whole year.
The reality is households are bruised financially and while they plan to spend this holiday season, the plan is to spend 18% less, according to Deloitte 2020 Holiday Retail Outlook Report. Travel, dining out, and alcohol for entertaining will see the majority of the spending cuts. The average spend for the holidays is $1,405.00.
However, it isn’t all bad news. According to payment processing company Moneris, a recent survey found 76% Canadians plan to shop local and support their communities while 70% plan to shop online.
When and where we shop may also be different this year. Fear that supply chains could be interrupted and inventory limited may push our purchases earlier. We witnessed the frustration of shopping online during the first wave of the pandemic as inventory levels dwindled quickly, and supply and demand principles kicked in and drove prices higher for scarce items. A little savvier this time around, an early start to gift buying has already begun if Amazon’s Prime Day is any indication.
Bricks and mortar stores may suffer as Deloitte found 47% of Canadian consumer say they have been shopping online more often since the virus hit and 25% are now making use of delivery services.
It is easy to conclude, this isn’t the year for the last-minute shopper.
Here are a few strategies to keep your spending in check:
- Know your limit: Don’t head online or to the malls without creating a holiday budget. And if you decide to use your credit card, make sure you only charge an amount you can pay off in a reasonable amount of time.
- How much is too much? This may sound a little tacky; however, the truth of the matter is you will spend more money on the ones you love the most. So create a shopping list and put dollar amounts beside each name. This will help you to stay on top of your budget.
- Switch your plastic. Instead of doing your shopping with your credit card as your top choice, consider using your debit card. Or you can bring your budgeted amount of cash to the mall. Once you’re out of that amount, your holiday shopping spree ends.
Retailers are hoping you will shop early and often. However, households and retailers recognize there has been a rapid change in consumer behaviour. We now have a clearer idea of what we need versus what we want, leading us to shop with intent while looking for deals.
Although we may be spending less, Deloitte found that consumers still want to help out their fellow Canadians and plan to increase their charitable donations by on average 86%. In the spirit of the holidays this is a significant COVID-19 silver lining.