2020 Canadian holiday outlook
A retailer's guide to adapting amid uncertainty
Many Canadian consumers—and retailers—aren’t sure what to expect as we approach the 2020 holiday season. We saw this uncertainty run through many of the responses to this year’s annual Canadian holiday outlook survey. Most notably, almost a third of respondents remain unsure of their social plans for this holiday season.
We’ve developed this year’s holiday retail spending forecast to help retailers prepare, given this widespread uncertainty. One thing is clear: successful retailers will be those who adapt to our quickly changing business environment and understand what a more digital world means for how they interact with consumers.
Here we explore the retail trends and holiday shopping behaviours retailers need to be aware of in the coming months, based on what 1,000 urban and suburban consumers told us in a cross-Canada survey we conducted in late August 2020.
At a glance
Heading into the 2020 holiday season, consumer concerns about the pandemic outweigh all other factors. The majority of Canadian shoppers expect to spend either the same or less overall this holiday season, with deep cuts in travel spending.
Online shopping will likely outweigh in-store purchases, as consumers prioritize convenience, health and safety. And while in-person cross-border shopping will likely be limited, we’re seeing the rise of the online global shopper.
Younger generations continue to be heavily influenced by online and social media advertising, particularly YouTube and Instagram. This is one of the starkest generational differences identified by this year’s survey.
Preparing for uncertainty this Canadian holiday season
Consumer concerns about the COVID-19 pandemic are front and centre
This year, the impact and implications of the COVID-19 pandemic are top of mind for consumers.
When asked the question, “Not taking into account your personal circumstances, what is your impression of how the overall economy will perform over the next six months?”, 69% responded “Worse than last year.” Generationally, this concern was highest among Gen X, Baby Boomers and the Greatest Generation, but it was also expressed by more than half of Millennials.
Similarly, when asked how the pandemic has affected their personal spending capabilities for the holiday season, 57% of respondents said it’s had a negative or slightly negative impact.
What has been the impact of the pandemic on your spending capabilities for the upcoming holiday season?
Top three economic/political factors that could impact holiday spend
This decrease in personal spending capability could be explained by the fact that more than half of respondents (excluding retirees) have seen a change in their employment status during the pandemic, from reduced hours to loss of their job altogether. But despite the pandemic’s economic upheaval, almost half of respondents (48%) find themselves in the same financial position as 12 months earlier.
Nonetheless, it’s no surprise consumer concerns about the pandemic rise above all other economic and political factors.
Still buying gifts, but staying close to home
Canadian consumers expect to spend the same or less this holiday season, with deep cuts in travel spending
In 2020, 86% of respondents plan to spend the “same or less” than last year—compared to 2019, when 83% of respondents planned to spend the “same or more” than the previous year. Overall, Canadian holiday spending is expected to fall this year, with some provocative generational differences.
But perhaps the main difference this year is what consumers will be spending their money on. While spending on gifts will likely stay more or less the same, travel spending is expected to fall drastically. In fact, more than half (59%) of respondents don’t plan to travel during this holiday season.
Compared to the 2019 holiday season, do you think you will…?
More than half of the respondents (57%) said the pandemic has had a negative impact on their spending capabilities.
More than half (59%) of respondents don’t plan to travel during this holiday season.
Year-over-year consumer holiday spending
Will Millennials rescue the holiday shopping season?
Among the generations, Millennials are set to spend the most. When looking at overall holiday shopping, Gen Z and Millennials plan to spend CA$1,216 on average, compared to CA$1,058 for Gen X and Baby Boomers. This younger group is also much more likely to travel during the holidays.
Similar to last year, the biggest proportion of holiday spending among respondents as a whole will be on family members. But people will be spending a lot less on themselves (-49%). Men will likely spend more than women (CA$1,326 vs. CA$910), including on themselves. While this was also the case last year, this year’s gap could be related to what some are calling the “shecession”: financially, the pandemic so far has had a disproportionate impact on women, who are more likely to have lost income and jobs than men.
Consumers looking for convenience, health and safety
Overall, online shopping will likely outweigh in-store shopping this year—is this a trend with staying power?
Canadian consumers plan to do more of their shopping online than in stores this holiday season, as they focus on convenience, health and safety, rather than the shopping experience itself.
Interestingly, online shopping from a desktop or laptop is up this year—especially among those who have been working from home throughout the pandemic. These shopping habits may continue, as 57% of respondents expect to work from home either full-time or part-time in the future.
How do you plan to do your holiday shopping across the following channels?
Another major trend accelerated by the pandemic is curbside pick-up, with 33% of shoppers choosing this method for their online purchases, compared to 13% last year. Unchanged from last year is the fact that Gen Z and Millennials are most likely to use this method either regularly or on occasion.
When it comes to in-store shopping trends, we’re seeing a big generational divide: 60% of those planning to do at least three-quarters of their holiday shopping in stores are aged 55-plus.
In-store shopping behaviours
For in-store shoppers, convenience, health and safety are top of mind. This year, these concerns outweigh experiential desires.
80% agree with the statement: “I just want to purchase my items as easily as possible”
78% agree with the statement: “I plan to do my holiday shopping in places where I can see measures are in place to ensure the health and safety of shoppers”
74% agree with the statement: “I plan to go somewhere that is close and convenient to carry out my holiday shopping”
Takeaway:
Cater to the new normal
Retailers need to prioritize convenience, health and safety as they gear up for the 2020 holiday season. Here are some key questions to consider:
How are you showing your customers you’ve prioritized their health before they even set foot in the store?
Have you implemented or enhanced digitally focused, contact-free experiences?
How are you setting up your stores to deliver an experience that’s both convenient and accessible?
Have you invested in your employees’ digital skills so they can better serve your customers—both in-store and online?
Virtual borders disappearing as geographical borders tighten
While in-person cross-border trips may be limited, online cross-border shopping is gaining traction
Even if US/Canada border travel restrictions were to be lifted before the holidays, the number of respondents who said they’d consider in-store cross-border shopping is down drastically from last year. But at the same time, we’re seeing an increase in online cross-border shopping—a phenomenon we refer to as the rise of the global shopper.
Do you plan to shop cross-border?
Why are consumers looking cross-border? According to our survey, cross-border shoppers are driven primarily by price (80%), as well as by product range (64%) and availability (62%). Footwear, apparel and accessories (48%) and electronics and audio equipment (43%) dominate their cross-border shopping lists.
So who is this global shopper?
- Driven by younger shoppers: 33% are Millennials
- Higher earners: 73% have household income of CA$50K+
- Strong Amazon Prime membership: 61% (compared to 45% overall)
- Heavily influenced by social media, especially Instagram
- See the in-store experience as an event
Takeaway
Don’t lose out to global competitors
We know more people will be shopping online this holiday season, so retailers need to invest in their digital strategies and should take advantage of this shopping persona. Here are some key questions to consider:
Have you optimized your website layout and loading times? Have you considered how artificial intelligence (AI) enabled technologies can help you improve the user experience?
Have you made sure your website can handle increased holiday demand and is optimized to best showcase your brand and products?
More online activity and transactions also mean an uptick in cyber risks. Is your payment platform up to code? Have you identified and reduced potential threats across different channels?
There’s significant demand for Canadian products and brands in important markets where we’ve recently entered into new trade agreements. Have you highlighted your “made-in-Canada” advantage where possible?
More than ever, customers want to know they’ll get their purchases on time during the holiday season. Are there ways you can optimize shipping, for example, by establishing nearby fulfilment centres?
Takeaway
Influence the influencers
It’s no longer “as seen on TV” but “as seen on Instagram.” A retailer’s social media strategy needs to be a top priority when thinking about holiday season success. Here are some key questions to consider:
We’re now seeing the rise of “influencer marketing”: some leading retailers are releasing products first to influencers and personalities on social media to build hype. A similar tactic is to develop “brand evangelists.” Are you leveraging these types of influence?
Do you know what type of problem you’re trying to solve with influencers? Is it a simple awareness problem or do customers need more nuanced brand advocacy in order to be coaxed into a purchase?
Do you understand the nuances of your customer’s journey—do you know at what point they’re most influenced by social media? Do you know what kinds of questions your customers are asking and when?
Have you considered using the targeting and ad capabilities of social media platforms to tap into your key buying demographic?
Prepare for the 2020 holiday season now
All we know with certainty is that uncertainty abounds as we head into the 2020 holiday season. 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.
Interested in learning more about how to attract the consumer of tomorrow? Contact us.
Contact us
National Consumer Markets Leader & Global Consumer Markets Advisory Leader, PwC Canada
Tel: +1 416 687 8598
Social media mania: Influence is strong among young consumers
Younger generations continue to be heavily influenced by online and social media advertising, particularly YouTube and Instagram
When it comes to what influences consumer purchases, we’re seeing another big generational divide: younger generations are much more likely to be influenced by online and social media advertising.
Among all demographics, Facebook, YouTube and Instagram lead the way, but younger consumers are choosing a more diverse mix of platforms, including Snapchat and TikTok.
Do advertisements from the following mediums influence your purchasing decisions?
Email
Print
Online
Social media
It’s likely no surprise that when we looked at who will engage with multimedia platforms during the holiday season, usage is disproportionately concentrated among younger groups: Gen Z and Millennials. For example, while only 7% overall will stream TV and movies multiple times daily, this number jumps to 45% for Gen Z and 43% for Millennials.
Influencers represent a new way to get closer to the consumer and their decision-making process. As influencer marketing becomes a strong channel for many marketing plans, influencers have begun to specialize their services to specific business needs and provide more nuanced services than simple awareness building.
But influence is about more than just reach. While “mega-influencers” can be effective as tools to boost awareness, some retailers are starting to use smaller influencers who have become thought leaders in their communities. Creating partnerships with these influencers can create legitimacy and affinity for a brand in a way that’s impossible to replicate through a mass channel.
When we look at how consumers are researching products for holiday gifts this season, Amazon and Google continue to dominate—even outranking retailer/brand websites.