Deloitte

October 29, 2009 00:01 ET

Deloitte: Canadian Holiday Shopping Intentions Remain Fragile as Economic Recovery Slowly Takes Shape

-Deloitte survey reveals how Canadians will allocate their holiday spending

TORONTO, ONTARIO--(Marketwire - Oct. 29, 2009) - Fifty-one percent of Canadians plan to spend the same amount this holiday season as they have the past two years. 44% of respondents plan to spend less than they did last year - up by 3% over last year's survey, which confirms little change in consumers' spending intentions. The major difference for Canadian consumers, and ultimately retailers this holiday season will be reflected in how and where holiday dollars are spent, as consumers focus less on durable goods and more on experience-based gifts, such as spa getaways and theatre tickets.

This holiday season, consumers only plan to allocate 26% of their holiday spending on gifts for others. The rest of their purchases will be on items for themselves and their families: 21% on home improvements, which could be attributed to the 2009 federal home improvement tax credit; socializing and entertaining will account for another 28%. The remaining spending goes to nongift clothing (9%), home/holiday furnishings (8%) and charitable donations (8%).

"All year long, retailers have been reducing inventories, and it's quite possible that the most desired items will be sold out early in the holiday season," says Brent Houlden, national retail practice leader at Deloitte. "Based on this year's results, retailers should brace for a wave of shoppers later in December, as Canadians will delay purchases until there are substantial mark downs," concludes Houlden.

Canadian retailers to compete with their American counterparts

Consumer confidence has risen steadily in Canada for the last six months, according to the Conference Board of Canada Consumer Confidence Index which reached the 90-mark in September, a level not seen since April 2008. By contrast, the US Conference Board Consumer Confidence Index has been hovering around the 50-mark for the last 5 months. Despite this gap between the two levels, Canadian retailers will have to work hard to drive holiday sales while facing intense competition from U.S. retailers.

As the Canadian dollar flirts with parity and some American retailers advertise deeply-discounted prices directly to Canadians, we can expect a re-opening of cross-border shopping. In the Greater Vancouver Area, for example, more than 30% of respondents indicated they were likely to cross the border for their holiday shopping.

Regional differences impact spending

Regional differences will likely play a role in how retailers do this coming holiday season. Job security, always a factor in shoppers spending decisions, varies significantly from coast-to-coast, with 81% of respondents feeling at least somewhat secure in the Greater Vancouver and Greater Toronto Areas, 89% in the Greater Montreal Area and 93% in Atlantic Canada.

However, some regional differences about holiday spending may offset economic factors, as Torontonians plan to spend slightly more than the national average while Montrealers plan to spend 25% less. Of note, Atlantic Canadians plan to allocate more of their holiday spending to gifts (33%) than other Canadians and more than any other category.

Toronto and Montreal residents plan to allocate (25% and 28% respectively) more to home improvements than other Canadians and more than any other category. Vancouver residents plan to allocate 32% of their holiday spending to socializing and entertaining.

Strategic social media use still emerging among retailers and younger shoppers

Although a growing number of respondents (20%) will be using social media for their shopping this season, the full potential of this new medium is yet to be seen. In fact, the top four reasons given for using social media tools are, in order: researching gift ideas (62%), finding discounts, coupons and sale information (55%), checking with friends or family on gifts they want (45%), and researching product reviews and recommendations (44%).

Top Gifts for 2009

1. Gift certificates/cards

2. Clothing

3. Food/liquor

4. Books

5. CDs or DVDs

6. Traditional toys

7. Money (cash or cheque)

8. Cosmetics and fragrances

9. Computer/video games

10. Jewelry

About the Deloitte survey

The survey was commissioned by Deloitte and conducted online across Canada by an independent research company between September 24 and September 30, 2009. The survey polled a sample of 2,180 individuals and has a margin of error for the entire sample of plus or minus 5 percentage points.

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 7,700 people in 57 offices. Deloitte operates in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. Deloitte & Touche LLP, an Ontario Limited Liability Partnership, is the Canadian member firm of Deloitte Touche Tohmatsu.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

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