Holiday spending expected to drop 11% in Canada while travel is up

Canadians intend to spend much less this year over the holidays but they aren’t scrimping on travel.

That’s according to a survey from Deloitte Canada, an audit and assurance, consulting, financial advisory, risk advisory, tax and related services company.

Four in ten (41 per cent) Canadians have seen their household finances worsen this year, with nearly half (47 per cent) expecting the economy to weaken in the next year, according to the 2023 Holiday Retail Outlook report.

This is leading some Canadians to reduce holiday season spending.

Canadians are expected to spend an average of $1,347 over the holiday season this year, down 11 per cent from last year, the survey found. Spending on gift cards is expected to drop 14 per cent and gifts, in general, will go down 18 per cent.

The downturn could be, in part, due to a lack of faith in retailers. Loblaw, Metro, Empire, Walmart and Costco were recently criticized for inflating food prices.

And 76 per cent of Canadians expect prices to rise this holiday season but nearly three in four (73 per cent) suspect retailers have been increasing prices unfairly. 

The survey also found Canadians are willing to shop widely and go the extra mile to find the best prices.

They will visit an average of 16.5 stores and websites this season, up 37 per cent from last year, and will shop for holiday gifts at Amazon (69 per cent), mass merchant retailers (61 per cent), and warehouse membership clubs (40 per cent). 

Many Canadians plan to shop for holiday gifts at Amazon. Photo: Karolina Grabowska

“Canadians are looking for value and are willing to shop around to find it – be it online or in-store,” said Marty Weintraub, partner, national retail leader at Deloitte Canada.

Despite inflationary challenges, more than half of Canadians (55 per cent) claim they are willing to pay extra for sustainable/ethical products and services, more likely for those younger (65 per cent for those 18 to 34 years old versus 47 er cent for those 55 plus).

On the other hand, while seven in 10 (70 per cent) Canadians believe retailers should be responsible for creating and selling products that don’t harm the planet, nearly half (44 per cent) question retailers’ sustainability claims.

“To win over these cost and green-conscious consumers this holiday season, it’s clear that brands and retailers have work to do,” said Weintraub

However, people don’t seem to want to cut back on travel and experiences.

One in four (26 per cent) consumers plan to treat themselves to a concert, spa, sports event, trip, or other experience, and holiday spending on travel is expected to rise 11 per cent over last year, according to the report.