2018 Canadian holiday outlook

Evolving consumer behaviours drive holiday retail trends

’Tis the season for great customer expectations

The holiday shopping season is here. Spending is up, and technology natives like millennials and Gen Z are driving consumer holiday shopping trends around omni-channel retailing, mobile payments and click-and-collect shopping.

Our 2018 holiday retail spending forecast explores the shopping behaviours retailers need to be aware of over the next few months, based on a national survey of more than 1,000 Canadian consumers across generational groups.

Buyers boost budgets

Canadian consumers spending more this holiday season

Canadian consumers plan to spend slightly more than they did last year, hitting an average of CA$1,563 each (up 3.7%). In addition, more Canadians anticipate their holiday outlay to stay the same as the year before (58% in 2018 vs. 53% in 2017).

Economic confidence reflected in spending habits

Lower confidence in the economy may have an effect on holiday spending growth. Those who think the economy will perform better over the next six months are likely to spend more, but only 16% expect it to. What’s more, 28% said trade protectionism could affect how they spend this season (up from 6% in 2017).


A generational divide over spending habits

While only a quarter of consumers plan to spend more this season over last year, more millennial dads (53%) and Gen Z consumers (39%) are upping their budgets. Millennial parents are also among the top spenders. This highlights the opportunity retailers have to use customer data to deliver unique experiences across different demographics.

What Canadians want

Men lead the holiday-spending charge

Gift cards are growing in popularity, but millennials are more inclined to want to receive and to buy physical items. This holiday shopping trend shows that having the right promotion strategy and mix of in-store products will help retailers provide a shopping experience that meets more customers’ needs.

What will Canadians spend their money on?

Travel continues to make up the largest part of holiday spending (46%), followed by gifts (41%) and entertainment (13%). When it comes to gender, men are spending more—up 7% to an average of CA$1,752—than women (CA$1,385).


 

And cats and dogs are going to be spoiled, too. Pet owners will spend an average of CA$65 on their animals over the holidays.


Gender breakdown of Canadian spending habits

Customers increasingly expect retailers to monitor their buying habits to tailor offers specifically to them, so businesses are turning to data analytics and artificial intelligence to get a better handle on shopping trends.

Seamless retail reigns

 

Demographics divide in-store and online trends

The majority of Canadian consumers love the in-store experience: Nearly two thirds consider brick-and-mortar retail their primary holiday shopping channel, with the rest focused on online shopping through desktops, mobile devices or smart home technology. Unsurprisingly, most millennials (51%) think of online shopping first, which is in line with US consumers overall (50%).

What’s more, three out of ten Canadians plan to shop across the border, either in-store, online or across both channels—with a whopping 38% of millennial dads visiting US retailers online.
 

Primary shopping channels

How Canadians get inspired and check prices

Nearly half of consumers prefer to visit stores to find inspiration and compare prices when holiday shopping. But for millennials, this preference shifts to Amazon and Google. For cross-border shoppers, they’re focused on good deals and a wider product range, especially for apparel (49%) and electronics (48%).

Retailers need to reimagine their in-store experiences and provide intuitive omni-channel environments to satisfy customer needs—and our holiday survey shows those who shop both online and in-store tend to spend more than single-channel shoppers.

Dollars to doorsteps

Online shopping drives new fulfillment and payment trends

Most Canadians prefer home delivery after shopping online, but price and convenience are encouraging many of them to pick up orders in person. The rise of condo living and increased urbanization make last-mile delivery more difficult, so shipping channels need to evolve with customer needs.


How do Canadians receive items?

The top reasons for curbside and in-store pickups are to avoid delivery charges and crowds, with mature millennials (ages 32 to 36) more likely to take advantage of click-and-collect discounts.

Although home delivery is the most widely used method, consumers are also picking up in-store and at designated points away from the store.


Why Canadians choose to pick up in-store

Amazon Prime is growing more slowly in Canada than in the United States, with membership up modestly to 23%, compared to more than half of Americans. More than ever before, customers are planning to use mobile payment methods like Apple Pay and Android Pay at the checkout, and using wearable devices to pay for items in-store has nearly doubled.

It’s important to experiment with new forms of digital checkout and embrace early digital adopters, as they’re likely to buy and spend more.

 

Defying expectations

Inside our millennial holiday shopping trends

Millennials prefer a personal touch to gift giving

While buying gift cards for others is on the rise, millennials are more inclined to purchase and want to receive physical items as gifts. For example, 38% of Canadians, compared to 21% of millennials, plan to buy gift cards for others.

Millennials are also more optimistic about their spending plans, with 38% planning to spend more than they did the year before, compared to 25% overall.

 

 

Housing costs and global warming weigh on millennials

Housing affordability remains a top concern among young Canadians, and its effects are bleeding into our holiday retail sales trends. When it comes to how outside economic factors influence holiday shopping decisions, only 23% of Canadians take housing costs into consideration, compared to 36% of young millennials.

What’s more, 13% of millennials (and 23% of gen Z buyers) consider global warming in their spending decisions, versus 8% overall.

 

Millennials’ spending in sync with self-perception

Millennial consumer behaviour is more in sync with how they see themselves financially. When we look at Canadians overall, two thirds see themselves as savers and the rest as spenders—but there’s little difference in average spend between the two groups (just CA$8). With millennials, those who consider themselves spenders are budgeting 25% more than savers (a CA$360 difference).

Holiday spending self-assessment

  Average holiday spend (CA$)  
  Overall Millennials
I'm a spender $1,568 $1,803
I'm a saver $1,560 $1,443
Difference $8 $360

Generational groups

Gen Z
Ages 17 to 22
Millennials
Ages 23 to 36
Gen X
Ages 37 to 51
Baby boomers
Ages 52 to 71
Greatest generation
Ages 72 and up

Contact us

Myles Gooding
National Retail & Consumer Lead, PwC Canada
Tel: +1 416 687 8598
Email

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