Deloitte's 2024 report shows inflation driving cautious holiday spending, with focus on finding deals
Deloitte Canada's 2024 Holiday Retail Outlook reveals that Canadians' holiday spending is forecast to rise by 10 percent this season, reaching $1,478, reversing last year’s decline.
Although spending is expected to increase, it remains below levels from previous years, including $1,520 in 2022 and $1,706 in 2019.
The report, titled The search for value: A season of cautious spending, indicates that the anticipated rebound in spending is not due to renewed consumer optimism. Instead, Canadians remain concerned about rising housing costs (55 percent), the ability to afford holiday gifts (35 percent), and credit card debt (31 percent).
Uncertainty about the economy in 2025 persists, although fewer Canadians expect it to worsen compared to last year. Inflation remains a major factor influencing how much Canadians plan to spend, with two in three consumers anticipating higher prices this season.
“This year's holiday season will be marked by a critical search for the best deals, both in-store and online,” said Marty Weintraub, partner, and national retail leader at Deloitte Canada.
He pointed out that consumers will face an abundance of choices in an increasingly crowded retail landscape, while navigating a shorter, more competitive holiday shopping season.
The report also highlights notable trends in holiday spending. Travel spending is expected to increase by 20 percent, and charitable donations are forecast to rise by 35 percent. However, spending on non-gift apparel is likely to experience the most significant decline.
Consumers are expected to allocate 43 percent of their holiday budgets to online shopping, with Amazon leading the way for 71 percent of online shoppers. Prime membership has reached an all-time high.
Furthermore, 30 percent of Canadians are exploring emerging eCommerce platforms such as Temu, Shein, and Alibaba. Younger consumers, particularly those aged 18 to 34, are increasingly willing to shop directly through social media platforms like Instagram and TikTok.
Canadians plan to spend 67 percent of their holiday budgets on or after Black Friday. However, with Black Friday falling five days later this year, retailers will have less than four competitive weeks to capture consumer spending.
The report also reveals that one in four Canadians have been affected by a retailer data breach, which has led 60 percent of them to either reduce or stop shopping at the impacted retailer. Finally, consumer attitudes toward generative AI (GenAI) show that six in ten Canadians are skeptical, with few expressing excitement (19 percent) or believing retailers should adopt it (18 percent).
"In an environment where constrained discretionary spending is likely to persist, we expect consumers to continue to gravitate to the retailers and platforms that meet their expectations for value," Weintraub said.
He emphasized that retailers must pay attention to longer-term trends such as new digital shopping destinations and social commerce, which will be crucial for future growth.
