As consumers are wary of inflation and a tough job market, 81 per cent of consumers are considering cutting back on their spending in the next six months. That’s according to a survey by the accounting firm PwC Canada.
Canadians will spend 10 per cent less this holiday season compared to last year.
Younger consumers will tighten their purse strings even more, with Gen Z planning to slash spending by 35 per cent.
“This isn’t just about spending less; it’s about a fundamental shift towards conscious consumption, where every dollar must deliver tangible value and purpose,” said Elisa Swern, national retail and consumer Leader at PwC Canada, in a press release.
Concordia University economics professor Moshe Lander said a decline in expenses was to be expected this year, given the GST and HST exemptions offered by the federal government during last year’s holiday season led to “front-loading” of purchases.
“So now that the tax holiday has ended, you’re not really comparing like to like. It would be reasonable to assume there will be a drop in consumer spending but not because of the state of the economy,” Lander said.
On average, consumers expect to spend $1,675 in gifts, travel and entertainment this holiday season.
Gen Z and millennial spending plans lean towards travel and experiences, while older generations plan to spend on gifts.
No to chatbots
There’s some good news for retailers, as consumers say they prefer shopping in person and interacting with humans over AI bots.
“I think it has to do with new (technology). People do like the fact that a human still better understands exactly what their needs are,” said Renaud Brossard, spokesperson for the Montreal Economics Institute.
“What we’re seeing with these customer service bots is that they are good at answering frequently asked questions but they still they can’t solve more complex needs just yet,” he added.
Sebastian Doyon of PwC Canada sees that as an opportunity for retailers.
“Retailers who lean into these trends, offering transparent value, personalized experiences, and a clear brand story, will not only capture sales but have an opportunity to build lasting loyalty in a challenging market,” said Doyon.
The survey also found the ‘Buy Canadian’ sentiment seen earlier this year also seems to be going strong, with nearly half of Canadians willing to shell out a bit more for Canadian-made products, and 78 per cent planning to seek alternatives to products made in the United States.
