Canadian retailers can expect a spending surge during the 2024 holiday season driven by younger shoppers, according to a recent survey by PwC Canada.
The PwC Canadian Holiday Outlook Survey found that Gen Z and Millennial shoppers are poised to outspend older Canadians. Gen Z and Millennials plan to spend an average of $2,296 and $2,233 respectively this holiday season – increases of 55 per cent and 51 per cent over last year.
“Retailers across Canada are poised to benefit from a clear spending surge from younger Canadians this holiday season, despite the affordability challenges that make headlines every day,” said Elisa Swern, National Retail and Consumer Leader at PwC Canada in a news release. “If they adapt their business strategies to align with these shoppers’ values and buying preferences, such as prioritizing quality and sustainability, and embracing digital payment platforms, retailers are poised to capitalize on the spending plans of these younger shoppers.”
The report said growing disposable income with Gen Z’s entry into the workplace and Millennials advancing in their careers is resulting in a boost in spending on gifts, travel, and entertainment.
“In sharp contrast, Gen X and Baby Boomers are cutting their spending this holiday season. The more cautious approach from older Canadians is leading to decreased spending across all categories, with expected holiday spending for these generations averaging $1,766 and $1,412 respectively – down 11 per cent and nine per cent from last year.
PwC said that on average, Canadians estimate that they will spend $1,853 on gifts, travel and entertainment this holiday season, a 13 per cent increase over last year.
“Not surprisingly, Canadians are thinking more positively about the economy as inflation and interest rates decline: 65 per cent believe the economy will stabilize or improve over the coming months, up from 48 per cent a year ago,” added the report.
“While many Canadians expect to spend more this year, they don’t necessarily have the cash to do so. 31 per cent of Canadians said they would dip into their savings.”
The survey also reveals key trends that businesses should consider this holiday season:
- Loyalty Perks: Many Millennials, Gen X and baby boomers said they’d switch to brands that offer more compelling loyalty program perks to get more value for their money—a finding that underscores the importance for retailers and consumer goods companies to explore what differentiates their loyalty program from competitors. But loyalty programs don’t appeal as much to Gen Z consumers who instead look to make their money go further by buying higher-quality items, use retail financing options, and buy second-hand items;
- Tangible Gifts Triumph: While older generations prioritize gift cards, Gen Z prefers giving physical items. This preference for tangible gifts reflects a desire for personal connection and thoughtfulness in gift-giving. Popular choices include apparel, cosmetics, toys, and alcohol;
- Digital Payment Preference: Embracing their digital native status, Gen Z consumers are leading the charge in using digital payment methods like PayPal (44 per cent compared to 31 per cent overall), Apple Pay and Android Pay (35 per cent compared to 14 per cent), and buy now, pay later platforms (11 per cent compared to five per cent);
- Early Shopping: Gen Z shoppers are more likely than their older counterparts to complete their shopping early. 21 per cent of Gen Z respondents say they plan to complete most of their shopping before Thanksgiving, compared to just 11 per cent of shoppers overall;
- Value and Sustainability: Gen Z and Millennials demonstrate a strong preference for sustainable and ethically conscious brands. If businesses can clearly communicate and market their products in this way, these generations will be encouraged to buy.
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