Amid high interest rates, inflation and decreased consumer spending, Canadian retailers have their work cut out for them trying to get people to make purchases this Black Friday, according to experts.
Bruce Winder, retail analyst and author, told Â鶹´«Ã½ Ottawa Thursday that Canadians are spending more on things like travel and less on goods like apparel and electronics, the kinds of items that are often heavily discounted on Black Friday.
He added seasonal hiring is down by about 30 per cent in Canada, which could indicate that retailers are not anticipating a lucrative sales season.
His comments come as inflation remains above the Bank of Canada's two per cent target, keeping prices high for household goods and large purchases, even as higher interest rates are causing many homeowners' mortgage payments to balloon.
Deloitte says it expects the average Canadian shopper will spend $1,347 this holiday season, down 11 per cent from last year. Roughly half of the more than 1,000 Canadians the consultancy company surveyed plan to buy only what their family needs this holiday season. Seventy-one per cent will seek items on sale and 29 per cent will seek less expensive retailers to shop at.
Ian Lee, associate professor at Carleton University in the Sprott School of Business and former banker, told CTVNews.ca Friday businesses consider Black Friday extremely important because of increased sales, and as consumers dial back retail spending, the importance of Black Friday increases.
"Black Friday is an antidote, if you will, that has the affect of offsetting the negative trend of increasing interest rates and inflation. So it's a boon and a benefit to retailers to have Black Friday sales to get people shopping again," Lee said.
He added in his recent personal experience he's noticed some businesses using different discount strategies this year, possibly in an effort to draw more customers this weekend.
"I don't have hard trend data … But it seems to me that retailers are moving away from sort of slashing 20 per cent to 30 per cent off across the board, they are using a lot more of—what I would say—targeted sales. They are offering sales on maybe five or 10 or 15 products but they're offering a very significant price reduction," he said.
Winder said during tough times it’s important to create a budget and stick to it, and when you see something you want that is heavily discounted, do some research and make sure the deal is as good as it appears.
"Comparison shop to make sure you’re getting a good deal and keep within your budget don’t over spend," Winder said. Lee agrees, he stressed the importance of comparing prices between stores when bargain hunting, especially when it comes to electronics.
"Because of the tough times we're in … I believe what we'll see once the data is in three or four months from now, that a good number of consumers moved their Christmas shopping forward—because you've still got to do shopping for Christmas—and they moved it forward to Black Friday to get really good deals, but they won't be shopping as much at Christmas time."
Lee predicts it is unlikely people will spend big during Black Friday sales and then continue to spend the same large amounts during the holiday season.
"I think it's going to be much more constrained," he said. "People have really dialed back on retail spending … and that's how people are coping with this period that we're in right now, these are the strategies that individuals are using, they've dialed back on their discretionary purchases.
"Of course you continue to make your mortgage payment, you continue to make your rent payment, you pay your utility bills—but anything discretionary, you know, clothing expenditures or electronics are being cut back and postponed, and people are doing that because they have less money."
Asked whether the pandemic has influenced the way people think about gift giving, especially under tight financial circumstances, Winder said he expects people to do things a bit differently this year.
"I think more people are going to do what they call a 'Secret Santa' where you buy for one person versus everyone," Winder said. "I think that people are going to make more gifts, I think they may even thrift some gifts believe it or not, and just spend a little less but try to enjoy the moment."
With files from The Canadian Press
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