Canadian retail sales (excluding automotive) for the holiday season are expected to increase 5.7 per cent year over year and 21.2 per cent since pre-pandemic (2019), according to Mastercard’s October SpendingPulse report and holiday forecast, which measures in-store and online retail sales across all forms of payment.
The report also forecast e-commerce retail sales to grow 3.8 per cent year over year and 63.1 per cent from 2019.
“While there are lots of pre-Black Friday sales and promotions happening to draw customers in early, we’re expecting a return of last-minute gift buying this holiday season,” said Steve Sadove, Senior Advisor, Mastercard, former CEO/Chairman, Saks, and former Chairman, National Retail Federation. “Easing supply chain issues coupled with a return to in-store shopping, has reduced the need for consumers to do their online holiday shopping well in advance.
“We’re seeing more of a holiday period than the individual days. There’s an emotional kick off to the season that takes place on Black Friday and it brings attention and starts creating momentum on the part of the consumer. I think that the days of hey Black Friday is a make or break event for the day or for the consumer is gone. The consumer is spreading out their purchases on a much broader basis. They’re starting earlier and finishing later.
“And you saw a lot of those early promotions in October that a number of the retailers ran. Some of it was driven by the excess inventories that they had in the system. The reality is the consumer is stretched right now. You’re already starting to see a tail off with the lower income consumer clearly more stretched than the higher end consumer and they’re looking for value and deals. And I think in many cases they’re holding off purchases to see when the best deals are coming.”
The report predicted that moderate sales growth was expected on Black Friday (two per cent year over year) and Boxing Day (7.5 per cent). Electronics sales, a popular purchase for consumers during these sales events in the past, are projected to be down 12.5 per cent (54.3 per cent since 2019) on Black Friday and 8.2 per cent year over year (54.8 per cent since 2019) on Boxing Day this year as consumer behaviour shifts.
The report expects the days leading up to Christmas to be the busiest of the season. A major boost for this season’s retail growth is expected from in-store shopping as customers have more flexibility to shop in-store again. Total retail sales are projected to be up 24 per cent year over year on December 23, and 17.5 per cent year over year on Christmas Eve.
It said strong growth for the Jewelry and Leather Goods sector will be seen on December 23 (25.4 per cent year over year). Apparel is also likely to be a go-to gift for shoppers on both December 23 (17.1 per cent year over year growth) and Christmas Eve (4.9 per cent year over year), in addition to Electronics (10.7 per cent year over year) on December 23 and 5.2 per cent year over year on Christmas Eve.
“This holiday season, consumers are looking to stretch their dollars as they deal with economic challenges, including higher interest rates, which makes it imperative for retailers to encourage spending through season-long sales,” said Michelle Meyer, North America Chief Economist, Mastercard Economics Institute.
Sadove said consumers are getting back into the stores. The fact that the sales forecast for the two days before Christmas Day is high is telling the retail expert that consumers are waiting it out until the end.
All the sales events are meant to bring excitement to the store, he said.
“The promotions this year from what I’ve seen so far are a bit more attractive to the consumer than they were last year. Last year was a period of tight supply chains and lower discounting. So you’re back to more what I call a reversion to the norm. So you’re back into more normal behaviour but the new norm is it’s not as dependent upon Black Fridays. It’s much more spread out. That is the new norm. But Black Friday is still important as an emotional kick off to the season.”