Retail Therapy on Most Holiday Shopping Lists: Credit Card Spending is Trending Up
Younger Adults Plan to Spend Significantly More
TORONTO, ON, November 22, 2021 – Consumers and small business owners are feeling more positive about holiday shopping leading into Black Friday according to new survey data* from Equifax Canada. Equifax consumer data also suggests their optimism is on target with average credit card spend trending up, increasing by 17.6 per cent in Q3 2021 compared to Q3 2020. Average monthly spend on credit cards is over $1,400 this quarter, the highest in the last three years.
“Credit cards have been the slowest product to recover from the pandemic and show a similar trend across other countries as well,” said Rebecca Oakes, Equifax Canada’s AVP of Advanced Analytics. “Seasonality, pent up demand, and people beginning to travel again combined with a rise in inflation can be attributed to higher spend behaviour. We’re also likely to see a small quarter-over-quarter seasonal increase in credit card balance and utilization.”
Looking forward to holiday shopping, two-thirds of survey respondents (64 per cent) plan to spend about the same as last year and 9 per cent expect to spend more. These numbers are up substantially compared to 2020 when 58 per cent said they would spend the same and 4 per cent said they would spend more. Only 25 per cent say they will spend less this year, which is significantly lower than 33 per cent in 2020.
Canadians aged 18-34 are much more likely than those aged 35+ to say they will be shopping more this holiday season (17 per cent versus 6 per cent), as are those with children under the age of 18 in the house compared to those aged 35+ with no young children (15 per cent versus 7 per cent).
“Retailers of all sizes can take heart that most consumers plan to purchase plenty of holiday gifts for friends and family,” said Oakes. “It’s another indication that we’re turning the corner on the financial impacts of the pandemic. It’s imperative, however, to remind people to stay within their financial limits and prepare a realistic budget to avoid unwanted financial stress in the New Year.”
Fortunately, the survey found 57 per cent of Canadians prepare a budget for holiday shopping. Additionally, the survey uncovered that significantly more, 70 per cent, are using their credit cards more often than cash for purchases compared to 2020. One-third (31 per cent) also indicated they use more than one credit card for holiday purchases and 26 per cent carry the most credit card debt in a month during the holidays.
WHEN & WHERE PEOPLE PLAN TO SHOP
Shopping Black Friday sales is in the plans for 49 per cent of survey respondents, 44 per cent will shop Cyber Monday sales, and 34 per cent plan to shop for Small Business Saturday sales. While more than half (56 per cent) of holiday shoppers say they are more likely to shop online this year because of the pandemic, half (51 per cent) say they plan on shopping in-store more this holiday season to support local businesses. The online shopping number dropped by 9 per cent compared to last year.
SMALL BUSINESS PLANS FOR HOLIDAY SHOPPERS
Equifax Canada also conducted a survey** of 300+ small business owners, 39 per cent of whom said they were just as confident in their business thinking back to last year’s holiday season and 36 per cent said they were more confident for this season. Only 20 per cent said they were less confident.
“Small business owners in particular have more reason to be optimistic compared to last year when most of their businesses were shut down owing to government lockdowns,” said Jeff Brown, Small and Medium Business Leader, Equifax Canada. “There’s good reason to believe they will do much better, especially those in the food and beverage or hospitality industries.”
Over half of businesses polled (56 per cent) said that they will be taking extra steps this holiday season to attract business, including offering sales/discounts (25 per cent), investing more in social media (21 per cent), or offering free delivery (16 per cent). Four-in-ten (38 per cent) of the businesses polled don’t plan to do anything different to attract customers heading into the holidays. Interestingly, businesses that have been in operation for 6+ years are significantly more likely to state that they don’t plan to do anything different to attract more business (47 per cent versus 18 per cent of those in business fewer than 6 years). Newer businesses are more likely to state that customers can support them this holiday season by sharing/posting about their business on social media (71 per cent versus 28 per cent of those in business 1+ years).
“Small business owners certainly deserve some good cheer this holiday season,” added Brown.