It’s almost that time of year again – the most critical period on the Canadian retail shopping calendar. And, as we approach closer to the 2021 holiday shopping season, merchants across the country are gearing up their efforts, refining their services and offerings and prepping their physical and online storefronts to welcome shoppers and realize opportunities to make up for a bit of a shortfall that they’ve suffered over the course of the past year-and-a-half. And, according to PwC’s recently released 2021 Canadian holiday outlook, it seems that conditions leading up to the festive period may be ideal for the fruition of these opportunities and the start of a demand-fuelled recovery. In fact, they are conditions that Myles Gooding, Partner, Global Consumer Markets Advisory Leader, PwC, says are lending to a season that’s more positive than that of 2020.
“The holiday shopping season is much more anticipated by the industry than it was last year,” he says. “We’re really getting a sense that as we continue to emerge from the pandemic and steer clear of economic shutdowns, that the upcoming season is feeling considerably different than 2020. There’s a lot more optimism as consumers are now able to start planning their spending with a bit more certainty. And, many are expecting to spend more on gift-giving and travel than they did last year. It’s all adding up to great news for retailers in the country, providing excellent signs that the trajectories of the economy and consumer sentiment are heading in a positive direction, resulting in quite a bit of excitement and confidence heading into the 2021 holiday shopping season.”
Increased holiday spending
Cause for excitement and optimism, indeed. According to PwC’s outlook, the average Canadian consumer expects to increase their individual holiday spending by 29 percent over last year, represented by an estimated average spend of $1,420. Though these numbers are still below pre-pandemic levels, 11 percent shy of what they were in 2019, it’s still positive news for those operating within the industry. What’s perhaps most interesting about consumer intentions this holiday shopping season, however, is the ways in which they plan to allocate their holiday spending. According to the outlook, Canadians are planning to spend most on gifts for their family and entertaining those closest to them, with an anticipated spend of $768, an increase of 18 percent over last year. In addition, Canadians are expecting to splurge on themselves over the next few months, 76 percent more over 2020, reflected in an outlay of $478 on personal pampering and luxury items. It’s all part of the positivity surrounding the upcoming shopping season, says Gooding, and a result of pent-up consumer demand for experiences and enjoyment.
“We’re already starting to see the demand-fuelled recovery take place as restrictions continue to lift and retailer activity increases,” he says. “It’s supported by a willingness of the Canadian consumer to spend. And, their spending on open venues and events, which is a symbol of pent-up demand and a consumer that’s ready to spend on experiences. It’s obviously the result of the economic uncertainty that’s lingered over the course of the past year-and-a-half – uncertainty that’s correlated to subsequent savings in the wallets of Canadians. So, the money is there. And all indications seem to point to the fact that Canadians are going to spend it this holiday season, in particular the higher earners who have come out of the pandemic period a little more robust with respect to their bank accounts and savings.”
Online shopping behaviour
Though pent-up demand and increases in retail activity across the country over recent months are buoying a sense of enthusiasm among retailers and industry observers, it’s paramount that they understand how their consumers are intending to shop in order to realize the full potential of the upcoming holiday shopping season. PwC’s outlook projects that lingering health and safety concerns associated with the pandemic will continue to influence consumer behaviour. And, combining their ever-growing penchant for convenience and cost-savings with their desire to shop seamlessly across channels, the need for retailers to align their online and physical offerings is going to be critical in order to attract consumer spending.
In fact, according to the outlook, Canadian consumers plan to split their holiday spending evenly, with 52 percent projected to occur online and 48 percent in physical retail settings. And, although home delivery will continue to be the primary service opted for by Canadians shopping online, the number of those who regularly or occasionally opt for curbside pickup jumped to 50 percent this year, up from 33 percent in 2020. Of those surveyed who said that they regularly pick up their orders, 45 percent state their motivation to be based on cost-savings. Though they are all behavioural trends that have been caused or accelerated by the pandemic, Gooding suggests that it’s part of an evolution toward a new normal for the industry.
“The most significant change that we noticed in the shopping habits of Canadians over the course of the past year-and-a-half is their propensity to be online,” he asserts. “It means that their behaviour is being influenced and shaped by channels that continue to evolve and are being leveraged to support the shopping journey and experience. Social media is playing an increasing role in inspiring and enticing consumers to shop with brands. And so, the online environment is becoming an even more meaningful component within the retail shopping ecosystem, often serving today as the starting point for many shoppers, informing them of the products that they’re interested in purchasing and how they’re going to complete the purchase, whether online or at a physical brick-and-mortar retail location. It’s all representative of the digitization of retail, heightened expectations of today’s consumer concerning a seamless omnichannel experience, and the need for organizations everywhere to adjust to these new realities.”
When it comes to the expansion of the omnichannel world and vastness of today’s online marketplace, it’s clear that there are numerous opportunities for retailers to focus on and seize. However, it also presents one of the banes of the industry in Canada – that of cross-border shopping. Though the borders have only recently opened to travellers, dampening the physical cross-border shopping intentions of Canadians up to this point, it’s anticipated that the act of doing so online will continue to intensify. According to the outlook, an estimated 38 percent of Canadian consumers plan to cross-border shop online this holiday shopping season, up from 28 percent in 2020. Despite this growing sentiment, however, a vast majority of respondents to the survey cite a patriotic appreciation as a motivator for their spend, with nearly two-thirds (62%) stating that they want to show loyalty to Canadian retailers and brands, while more than half (55%) say that they want their shopping dollars to stay in Canada in order to help the country’s economy. And Gooding suggests that Canadian retailers are doing everything they can to support those intentions.
“The traditional drivers of cross-border shopping for Canadian consumers still exist today,” he explains. “There’s a perception that there’s a greater assortment at a lower price on the websites of US retailers, even if that math doesn’t always hold up to be true. Canadian retailers are doing a really good job at the moment of keeping those dollars in Canada. Many are increasing their assortments and offering deals that are on par with their American counterparts. And, with an aim to capture the spend of those consumers displaying intentions to spend with Canadian businesses, there’s an increased emphasis on featuring Canadian brands and products that are made in Canada. Heading into this holiday shopping season, the Canadian consumer wants to be loyal to the brands in this country. And it’s going to be important for Canadian retailers to recognize this and deliver value through the product and experiences that they offer.”
Living up to all of these heightening consumer expectations seems like a daunting task for any retailer, which includes ensuring the availability and fulfillment of product, and the delivery of an exceptional experience, all within a seamless omnichannel experience. Gooding explains that when retailers can meet or exceed the expectations of today’s consumer, they’re able to engender a trust in them for their brand. It helps to develop or enhance the perception of a brand’s reliability and comfortability with respect to the shopping experience they offer. However, lending perhaps more so toward the cultivation of trust than anything else a brand can do, suggests findings within PwC’s outlook, is the values it stands for. Of those surveyed, 45 percent say that they’re likely or extremely likely to shop with socially and environmentally responsible retailers, an increase from 35 percent in 2020. It’s a huge consideration among consumers, says Gooding, adding that it’s another sentiment that is not likely to subside any time soon.
“There’s a lot of focus today being placed on environmental, social and governance issues,” he says. “And, it’s an area where retailers can really focus on their values and demonstrate those values to the consumer in tangible ways that align with the things that are most important to them. Depending on the retailer and the product or service that they offer, improving components of the business through initiatives like ethical sourcing, ethical labour practices, sustainable product and the sustainable manufacturing of products will go a long way toward instilling trust in the consumer. And, measuring how well they’re doing and sharing results with the public will provide the transparency and accountability that consumers are increasingly looking for from brands. Values are quickly becoming the new business currency. And the retailers and organizations that stay true to those values are going to be the ones that build their brand and create much-needed stickiness with their customers.”
It’s been a turbulent past 18 months for retailers in every region across the country. It’s been a time riddled with instability and uncertainty. However, as social restrictions continue to abate, consumer sentiment around spending maintains its positive momentum and the 2021 holiday shopping season advances unhindered, the signs are positive, indicating a successful period for merchants in Canada. And, if findings within PwC’s 2021 Canadian Holiday Outlook manifest, the opportunities that will be available for retailers from coast-to-coast-to-coast to engage and inspire Canadian consumers this holiday shopping season will be boundless, truly making it the happiest time of the year for everyone within the industry.