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Feeling financial pressure, many Canadians are tightening our Black Friday and holiday shopping budgets—and we’re looking harder to find the best deals.
The holiday season is coming, and it’s not looking very merry, money-wise. Canadians are facing a bundle of financial pressures, including inflation, high interest rates, mounting personal debt and lingering fears of a recession. No doubt, life in Canada is getting more expensive. And as retailers start pumping out gift guides and charities ramp up their holiday appeals, many of us are eyeing our bank accounts and thinking, “Not this year.”
Canadians are already planning to spend less, according to Deloitte Canada’s 2023 Holiday Retail Outlook. This is an annual forecast for retail businesses—but this year, there’s little for them to feel jolly about. According to a survey of 1,000 Canadians, we plan to spend an average of $1,347 over the 2023 holiday season. That’s down 11% from 2022’s forecast of $1,520 and nearly 27% from 2021’s forecast of $1,841. What are we cutting back on this year? Charitable donations (-40%), gifts (-18%) and gift cards (-14%).
Canadians always love getting deals, but we’re going to spend carefully this year and focus even harder on value, says Marty Weintraub, national retail leader at Deloitte Canada. “We’re seeing the money shift to what we call ‘extreme value.’ The top reasons for picking a retailer are: number one, reasonable prices, and number two, value for money,” he says, adding that shoppers plan to spend more at mass merchant retailers and warehouse membership clubs this year.
Other notable findings from the survey, conducted in September:
What’s your deadline for holiday shopping this year?
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On the brighter side, some Canadians are still finding room in their budgets to indulge a little and to spend according to their values. According to the survey findings:
Thrifty-minded Canadian shoppers are buying second-hand goods for friends and family, according to a trend report by Poshmark. And the same survey found that 47% of respondents would rather receive a second-hand gift than a fast-fashion item.
How is travel spending rising when we’re cutting costs elsewhere? “Post-pandemic, we still have some revenge travel happening this holiday season,” says Weintraub. “Last December, if you went away, it was a gong show at the airport and with the airlines. As a result, some people said, ‘Not for me, I’ll do it later.’ Some of that’s coming back this year, but in the context of inflation hitting travel as well.”
Weintraub himself is taking his family on a trip over the holidays, and he expects to spend more than he would have last year. “I want to provide an experience for my family rather than buy things, and I want to go because I didn’t get to do it in the past couple of years,” he says. “I’m going to borrow from Peter to pay Pauline—take it out of one pocket and put [it] in another—and I’m willing to pay for more it.”
Deloitte’s findings echo the results of other surveys. In mid-October, the MNP Consumer Debt Index shared that more Canadians are struggling with debt, high interest rates and concerns about job loss. Half of respondents reported that they are $200 or less from being unable to meet their financial obligations.
“There is no mystery as to what is causing Canadians’ bleak debt outlook: it’s getting increasingly difficult to make ends meet,” Grant Bazian, MNP’s president, said in a press release. “Facing a combination of rising debt-carrying costs, living expenses and concern over the potential for continued interest rate and price hikes, many Canadians are stretched uncomfortably close to broke.”
Meanwhile, results from the BMO Real Financial Progress Index, released in November, found that half of Canadians feel “anxious” when they think about holiday spending. Four in five shoppers plan to purchase fewer gifts this year, and nearly half will spend less money on fewer gifts, too.
“The holidays are certainly a time to celebrate with loved ones, but the holiday parties, family gatherings, travel and gift exchanges can also pose a financial strain—especially during times of economic uncertainty,” Gayle Ramsay, BMO’s head of everyday banking, segment and customer growth, said in a press release. “The rising cost of living will be top of mind this holiday season, but planning early, using digital tools to conveniently set and monitor budgets, and working with an expert can help Canadians stay on track, alleviate financial anxiety and enable them to continue making long-term real financial progress.”
High interest rates have a silver lining: You can earn more interest on your savings, if you open a high-interest savings account (HISA) or invest in a guaranteed investment certificate (GIC). Right now, you can find GICs with rates close to 6%.
In addition, to help yourself get a handle on your finances during challenging times, check out these MoneySense articles and resources:
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