A new survey has found that Canadian consumers plan on spending more during the upcoming holiday season than they did last year, despite mounting concerns about a potential recession and high levels of household debt.
According to a survey of 1,302 people conducted by PwC Canada, Canadians expect to spend an average of $1,593 over the 2019 holiday season, an increase of 1.9 per cent over 2018. About one-in-four Canadians (24 per cent) plans to spend more in 2019 than they did last year, while 59 per cent said they would spend about the same amount. Just 13 per cent said they would spend less over the holidays than they did last year.
The survey results may come as a surprise to some consumers who have seen optimism about the economy wain over concerns of a global recession, as well as extremely high levels of household debt.
Myles Gooding, head of retail for PwC Canada, said the results show that Canadians – particularly younger shoppers between the ages of 17 and 37 – are still positive about the state of the economy and their personal finances.
“Spending continues to be robust, and it is driven largely by millennials,” Gooding said in an interview with Yahoo Finance Canada.
“While the paradox of concern of debt piling up continues to rear its head, the Gen Xers and millennials continue to have confidence in the economy and continue to push forward with their spending.”
A TD Economics report released last month said recent Canadian consumer spending growth has been muted, thanks in part due to high household debt levels.
“Highly-indebted households have kept a fairly tight grip on their wallets,” the report said.
“Debt levels remain high on average and the household saving rate remains low, at just 1.7 per cent. With little buffer, households may be choosing to squirrel away their extra earnings.”
And yet, despite recession worries and stunted spending, Canadians appear willing to open their wallets over the holidays – particularly millennials and Gen Z consumers. The survey found that younger shoppers are more optimistic about the economy and willing to spend, with 35 per cent of millennials (ages 24 to 37) willing to spend more this year compared to 42 per cent of Gen Z shoppers (ages 17 to 23).
The survey also found that more than 80 per cent of Canadians plan to use their credit card at some point during the holiday season. Just 17 per cent said they were concerned about credit card debt.
As for retailers hoping to get in on the holiday action, Gooding said the best approach is one that provides a seamless experience between online and brick-and-mortar shopping.
“Providing online as well as in-store experiences – that’s what’s on the rise,” Gooding said.
Millennials are a driving force for e-commerce, with 55 per cent saying they will shop online this holiday season. Gen Z shoppers were split evenly between online and brick-and-mortar shopping.