Amid increasing concerns over inflation and a challenging job market, a recent survey conducted by PwC Canada reveals that 81 per cent of consumers are contemplating a reduction in their spending over the next six months. This shift in consumer behavior underscores the financial caution prevailing among Canadians.
For the upcoming holiday season, Canadians are expected to spend approximately 10 per cent less compared to last year. Notably, younger consumers, particularly those belonging to Generation Z, are projected to cut their spending by a staggering 35 per cent. This generation's drastic reduction emphasizes a broader trend toward more conscious consumption, where every expenditure is scrutinized for its value and purpose, as stated by Elisa Swern, the national retail and consumer leader at PwC Canada.
Economic expert Moshe Lander from Concordia University explained that the anticipated decline in consumer expenses was foreseeable. Last year's holiday season saw various GST and HST exemptions from the federal government, which encouraged premature purchasing—a phenomenon referred to as "front-loading." Consequently, with the expiration of this tax break, a reduction in consumer spending is expected; however, Lander noted that this trend does not necessarily indicate a downturn in economic conditions.
On average, consumers plan to spend around $1,675 on gifts, travel, and entertainment during this holiday season. However, the spending habits reveal a generational divide: while Generation Z and millennials are inclined to invest in travel and experiences, older generations are focusing their expenditures on gifts.
No to chatbots
In a notable shift in consumer preferences, shoppers show a distinct preference for in-person shopping and human interaction over AI-powered chatbots. Renaud Brossard, a spokesperson for the Montreal Economics Institute, highlighted that as technology evolves, people still value the nuanced understanding that human representatives possess regarding their needs. While chatbots excel in addressing frequently asked questions, they fall short when it comes to solving complex issues.
Sebastian Doyon of PwC Canada recognizes this consumer inclination as an opportunity for retailers. He emphasizes that those retailers adapting to these consumer trends—by providing transparent value, personalized experiences, and crafting a clear brand narrative—will not only drive sales but also cultivate enduring customer loyalty during challenging market conditions.
The survey also highlighted a persistent "Buy Canadian" sentiment among consumers, with nearly half expressing a willingness to pay a premium for Canadian-made products. Furthermore, 78 per cent of respondents indicated their intention to look for alternatives to products produced in the United States. This shift indicates a growing preference for domestic goods, reflecting a commitment to supporting local industries.
