High inflation has left Canadians counting their pennies far more than usual this year, making the job of retailers to convince them to spend this holiday season harder than ever.
Friday marks the unofficial start of the holiday shopping season, as U.S.-style Black Friday sales are now firmly entrenched in Canada, too.
The annual spending bonanza is different this year, however, as experts say that while there are more deals than usual, they’re coming against a backdrop of consumers who are more cost conscious than ever.
“It’s the year of the discount, it really is,” retail consultant Bruce Winder said in an interview. “Consumers have shown that they’re frugal, they’re stingy this year, and they’re not going to buy unless it’s on sale.”
A lot of excess product
Excess inventory levels are a big reason why discounts may be deeper than usual this year.
In the early days of the pandemic, retailers struggled with supply chain issues that led to empty shelves in many product categories. But Winder says the pendulum has swung the other way now, as many retailers have far more inventory to move than they normally would this time of year — which is pushing them to discount it more deeply and earlier than they normally would.
“It went from being out of stock to having too much stock in some circumstances, but that bodes well for consumers,” Winder said.
Elliot Morris, grocery and consumer packaged goods leader at EY Canada, says retailers are caught between a rock and a hard place. “As the economy slows, there are areas of inventory which clearly have built up with retailers,” he said. “As we get through the balance of the holiday season, if that inventory continues to sit on shelves … you will see deeper discounts.”
Retailers themselves are keenly aware that customers are choosier than ever this year, which is pushing some new names to get into the Black Friday game.
Melissa Austria runs GotStyle, a unisex clothing store in Toronto. She typically doesn’t have across-the-board sales this time of year, but today her store will be offering some suits and sport jackets at 50 per cent off.
“We’re noticing we have to bring in things that are a little bit more price sensitive for the everyday casual customer that normally wouldn’t shop here,” she told CBC News in an interview. “The more casual customer who wouldn’t normally buy a high-ticket item is definitely putting the brakes a little bit.”
Michelle Wasylyshen with the Retail Council of Canada says she’s optimistic about the outlook this year, but it’s clear that pricing will be the biggest consideration.
“I think everybody has concerns of a slowing economy, but it does look like consumers are still spending, they’re just spending more wisely,” she told CBC News in an interview.
On the streets of Toronto, shopper Pradheepa Simonpillai says she plans to spend less than she normally would this holiday season, even with a young child to care for.
“I don’t buy anything unless it’s absolutely necessary,” she said. “I’m going to find really creative ways not to spend money this season.”
Another shopper, Amir Ali, says he plans to be out shopping on Friday precisely because he thinks there will be deals to be had.
“You’ve just got to make different decisions [but] I’m still going to get some gifts for the kids and stuff like that,” he said.
Annie Titheridge also plans to brave the crowds this year because she likes to be able to touch and feel products before buying them, something she can’t do with online shopping.
“My husband and daughter think I’m mad going shopping on Black Friday,” said Titheridge, who will drive from King City north of Toronto to the Yorkdale Shopping Centre for the day. “But if the deals are good and something jumps out at me, what can I do?”