Canadian retailers are expected to offer deep discounts this Boxing Day in a bid to entice shoppers to buy up leftover holiday and seasonal goods and raise enough cash to endure the latest round of pandemic restrictions.
Yet despite the rush of slashed prices and promotions already rolling out, industry watchers say the post-Christmas shopping spree will be subdued as Ontario's new lockdown takes effect, pushing sales in the country's most populated province almost entirely online.
鈥淚 think we're going to see a ton of deals and some fire-sale prices,鈥� says Farla Efros, president of HRC Retail Advisory.
鈥淭here is going to be so much excess inventory that they're just trying to get rid of鈥� she says. 鈥淭hey also need cash. It's all about the balance sheet.鈥�
Still, Efros, who served as interim CEO of U.S. fashion brand True Religion in 2019, says the spending spree will likely be a 鈥渟ad鈥� and 鈥渓acklustre鈥� shell of its usual self.
Boxing Day, historically the country's biggest sales event, is a holiday shopping bonanza that usually sees massive crowds descend on malls and main streets the day after Christmas in search of deals.
It has been increasingly overshadowed by Black Friday, which falls the day after the U.S. Thanksgiving holiday, as shoppers check gifts off holiday lists early.
A holiday retail report by Deloitte Canada says the American shopping event has become 鈥渁n entrenched part of the Canadian shopping landscape鈥� in just a few years. A JLL Canada holiday survey also found that 16 per cent of Canadians planned to seek out Boxing Day deals, compared to 29 per cent on Black Friday.
Amazon added another rival to Boxing Day this year when it moved its Prime Day to mid-October, pushing the unofficial start to the holiday shopping season even earlier.
Despite the increasing competition for holiday dollars, retail experts say there is a glimmer of hope that Boxing Day could regain some of its former prominence this year.
鈥淐anadians weren't able to cross the border into the U.S. for Black Friday to get some of those deeper discounts, so it could have been a great year for Canadian retailers to get back a little bit of the glory days of Boxing Day,鈥� says Tandy Thomas, an associate professor in the Smith School of Business at Queen's University.
鈥淏ut all those plans have been tossed out the window.鈥�
While widespread retail closures will be in effect in Ontario, Quebec and Manitoba on Boxing Day, other provinces have strict capacity rules curtailing how many shoppers can be in stores, dissuading some from venturing out altogether.
The restrictions are expected to lead to a largely online Boxing Day, similar to Black Friday.
鈥淭he big retail story this entire year is about online shopping and that will continue on Boxing Day,鈥� Thomas says. 鈥淭he key is going to be for retailers to figure out how to attract customers to their websites and encourage them to spend.鈥�
She says Boxing Day is one of the few times of the year when 鈥渃onsumers are primed to shop鈥� and some people have been waiting for the sales event to spend money.
鈥淲e have a bit of a bimodal situation where some people are desperately struggling with incomes severely impacted by the pandemic while others have been accumulating savings and are looking to spend money,鈥� Thomas says.
Still, retail observers say even shoppers who want to spend cash will expect steep markdowns and promotions before clicking to buy, and stores will likely step up and offer what consumers want in a bid to clear out stock.
鈥淧eople are buying a lot of gift cards this year and not the traditional wrapped gift so there's an excess of inventory and some pent-up demand,鈥� says Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group.
鈥淲e'll likely see a high level of redemption of gift cards on Boxing Day.鈥�
Fashion retailers, among the hardest hit during the pandemic, will likely offer big sales on apparel and footwear, she says, noting that many stores began rolling out Boxing Day promotions in the week leading up to Christmas.
鈥淚 think we'll see a Boxing Day rush, but I think sales will also be stretched out a bit,鈥� Hutcheson says. 鈥淲e'll likely see another surge in deals when things reopen because retailers don't want to get stuck with aged goods like holiday and seasonal apparel.鈥�
She adds: 鈥淔or retailers, it's the balance of needing cash and also liquidating inventory that hasn't sold.鈥�
Other items in categories like sporting goods and hobbies or home cooking could be harder to come by with fewer sales on offer, Hutcheson notes.
鈥淚f you go into a Canadian Tire some of the sporting goods shelves are empty,鈥� she says. 鈥淲e could see some of the shortages we saw during the first wave of lockdowns.鈥�
This report by The Canadian Press was first published Dec. 24, 2020.
