December 07, 2007 08:00 ET

Deloitte: Canadian Retailers Need Creative Tactics to Retain Price-Sensitive Holiday Customers

Deloitte survey reveals Canadians' holiday spending holds steady

TORONTO, ONTARIO--(Marketwire - Dec. 7, 2007) - In order to get a fair share of this year's holiday spending, Canadian retailers are introducing innovative strategies to attract the price-sensitive holiday shopper.

"Today's consumers are more savvy. Not only are they comparing prices and selection between Canadian retailers, but they're also visiting the highly sophisticated online operations of U.S. companies," says Rajiv Mathur, partner with Deloitte's Consumer Business practice. "From early Boxing Day sales to lowering prices to match online and U.S. competitors, we're already seeing many Canadian retailers adapting a short-term strategy to attract price-sensitive holiday consumers."

Holiday spending to remain steady

A majority of Canadians expect to spend the same this year on their holiday shopping as they did in 2006, according to a recent study of Canadian consumers commissioned by Deloitte.

A quick view of regional differences in spending habits reveals that roughly one quarter of shoppers in the Atlantic regions and Alberta plan to spend less this holiday season, while in Quebec, the equivalent amount (24%) of shoppers expect to spend more.

Meanwhile, consumers plan to purchase quite a number of gifts this season. Survey results show that nearly two-thirds of all respondents (62%) plan to buy more than 15 gifts this year, while 46% plan to buy more than 20.

This all adds up to what we see in the marketplace: a very value conscious, savvy consumer who is looking for good deals.

Multiple choices for consumers

While they expect their spending to remain flat, survey respondents indicated they will spend their money using both bricks and mortar and online shopping channels.

Approximately two-thirds of all respondents (62%) expected to purchase their holiday gifts at discount/value department stores, making it the most popular retail source for holiday shopping. Saskatchewan respondents lead the pack at 78%, followed by Atlantic (74%) and Manitoba (68%). However, only 48% of respondents from British Columbia suggested they would visit this type of retailer this holiday season.

Thirty-four percent of respondents indicated they will use the Internet this holiday buying season (significantly less than 70% of U.S. respondents who expect to do part of their shopping via the Internet). Traditional department and electronic stores will account for 13% each of additional shopping experiences.

The propensity for shopping online appears to break along regional lines. Among respondents who intend to shop online, Saskatchewan purchasers showed the highest inclination to conduct at least some of their holiday shopping online (75%), followed by Ontario purchasers at 73%, and British Columbians at 65%. For their part, Quebec consumers are least likely to conduct at least some of their holiday shopping online, with only 48% of respondents indicating their intention to do so.

"Canadians may be holding their spending steady due to the increased transparency of pricing on the Internet," Mathur says. "The ability to price compare without leaving home makes for more informed consumers and may be part of the reason why Canadian retailers are responding with promotions like pre-Christmas boxing day sales."

Gift cards gaining popularity

While clothing tops the gift purchase list this year (65%), gift cards run a close second. Fifty-one percent of respondents expect to buy between one and three gift cards this holiday season - which speaks to Canadian shoppers' view that gift cards are fast becoming a convenient, efficient and popular purchase during the holidays.

Effect of Canadian dollar

Given the recent rise of the Canadian dollar, it's not surprising that 64% of respondents stated they would consider cross-border shopping this holiday season. Clothing (80%) and shoes (64%) were the items cited most often to be purchased south of the Canadian border. Of least interest? Do-it-yourself home improvement goods, which were favoured by only 12% of respondents.

There are notable regional differences among cross-border shoppers. While 74% of Manitobans would consider cross-border shopping, followed by 71% of British Columbians, only 37% of Quebecers indicated they were thinking of shopping in the U.S.

Generational differences at play

Spending patterns also appear be to holding steady across generation lines - among baby boomers (born 1946-1963), 63% are likely to shop at discount/value department stores and 43% plan to shop at home electronics stores, and for Generation X (born 1964-1979) numbers ring in at 64% and 50%, respectively.

While Generation Y consumers (born 1980 to present) still plan to shop at discount stores (54%) and home electronics stores (49%), respondents in this demographic displayed a higher propensity than other purchasers to shop online (47% compared to 16% of baby boomers and 25% of Generation X).

Changing world requires long-term strategy to survive

"The fight for share of consumer spending, however, is not limited to the holiday season," says Mathur. "With the higher Canadian dollar, we expect consumers to continue to look for good deals on both sides of the border, on and offline. Retailers need to address the issue that consumers have greater price transparency available to them. Therefore, they should have an integrated strategy for their bricks and mortar and online channels. Without one, they will continue to face declining sales to competitors who have."

About the Deloitte survey

This survey was conducted online with 1,357 Canadian adult male and female shoppers of all ages, selected randomly from the Hotspex panel, and took place between November 5 and November 13, 2007. The margin of error is 2.64% (at 95% of confidence).

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 7,600 people in 56 offices. Deloitte operates in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. The firm is dedicated to helping its clients and its people excel. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms have any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu," or other related names. Services are provided by the member firms or their subsidiaries and not by the Deloitte Touche Tohmatsu Verein.

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