TORONTO – The Covid-19 pandemic – and all the challenges it poses in the upcoming months – is fundamentally changing how Canadians plan to shop and spend this holiday season.
According to a new study by Deloitte, overall holiday spending is expected to drop 18 percent from last year, while online shopping is gaining traction at an exponential speed, with Amazon taking the biggest slice of the pie.
The pandemic has directly affected 68 percent of Canadians this year, casting a shadow of caution over the 2020 holiday season. While many consumers feel relatively secure about their household finances, they are less optimistic about the outlook for the economy, especially as the country prepares for a looming second wave of the pandemic.
With this mindset, 35 percent plan to cut back on their holiday spending, especially on travel and dining out, but expect to spend more on groceries and cannabis. Overall, Canadians plan to spend an average of $1,405 over the holidays, compared to $1,706 in 2019.
“The pandemic has thrust widespread changes upon the way we live and work at a pace few could have anticipated. Same goes for how Canadians shop, and it’s unlikely they will ever return to their old shopping habits,” said Marty Weintraub, partner and national retail leader at Deloitte Canada.
“Whether personally affected by Covid-19 or not, consumers are much less optimistic about the country’s economy, which will drastically alter how much and where they’re going to spend this holiday season. Retailers will undoubtedly see the significant impact of these changing shopping behaviours in the upcoming months.”
Canadians love Amazon
While online shopping has been increasing over the past several years, the global health crisis has significantly accelerated the trend, with 47 percent of Canadians saying they’ve been shopping online more often since the pandemic began. Online shopping is set to gain even more traction as a response to Covid-19.
This year, consumers expect to spend 44 percent of their holiday budgets online, up from 36 percent in 2019. Two thirds claim they’ll use Amazon to find and purchase items this holiday season, up from 60 percent last year – well ahead of both Google (57 percent, up slightly from 54 percent in 2019) and bricks-and-mortar stores (53 percent, down sharply from 69 percent last year).
Canadian consumers love Amazon. For many, it’s where the shopping journey begins—and ends.
With just 53 percent of consumers likely to head to stores to research and buy holiday gifts and other items this year, Amazon has dethroned the store as the kickoff point for Canadians’ shopping journey. While 25 percent expect to spend the largest proportion of their holiday spending at Amazon this season, Amazon Prime also continues to glean a loyal fan base in Canada, with 35 percent of Prime members believing their Amazon spending will increase this year compared to 2019.
Bricks-and-mortar losing luster
Consumers still value the in-store shopping experience for a number of reasons, such as avoiding shipping costs, interacting with products, and easier returns, but these “pulls” are outweighed by several factors. Though a majority (58 percent) of Canadians feel retailers have implemented the right precautions during the pandemic, 64 percent cite the risk of exposure to Covid-19 as a reason to avoid stores, along with crowds and long lines both inside stores and to enter stores in the first place.
“Holiday shopping is not going to be viewed as a fun experience this season, but rather as a task to be completed as quickly, efficiently, and safely as possible,” Weintraub said.
“For many Canadians, this will simply mean shopping online, but bricks-and-mortar retailers haven’t completely lost their attraction. Despite the fast-growing popularity of online shopping, those that can address consumers’ concerns around protecting health and safety, and deliver a seamless, personalized, engaging customer experience that goes beyond expectations, will still bring customers in.”
Deloitte’s 2020 Holiday Retail Outlook explores the shopping behaviours, attitudes, and preferences retailers need to know about during the upcoming holiday season. The findings are based on a September survey of more than 1,000 Canadian consumers across age groups, financial situations, and geographic regions.