All that retailers want for Christmas is for you to spend, spend, spend.
According to The News York Times, November and December can account for up to a quarter of the annual sales of department stores and specialty retailers, but shoppers are heading into the current season reluctant to shop quite like they used to.
- According to Deloitte Canada, the average household will spend $1,520 this year on the holidays, 17% less than in 2021, as Canadians brace for economic headwinds.
Marty Weintraub, Deloitte Canada’s National Retail Leader, told The Peak that across income brackets, consumers have seen their buying power shrink, but added that “those looking to stretch their dollars will see great deals” as retailers sit on excess inventory.
Canadian mega-brands are already feeling the pinch…
Shares dropped for Lululemon (-12.5%) after reporting lower-than-expected profitability. Meanwhile, Roots (-9.7%) reported a sales drop of 8.5% compared with the same time last year, citing factors like mass discounts and a shift from cozy to work-appropriate wear.
Why it matters: As retailers compete for fewer dollars this holiday season, customers are on track to get the deals they’re looking for (even if it means trading down brands). Staying in tune with those customer needs will be critical for retailers until the economy normalizes.
Zoom out: A disappointing holiday season could result in business closures, restructurings and layoffs for the retail sector in 2023. Amazon, Peloton, FedEx, Walmart, and The Gap have already either laid off workers or implemented hiring freezes to save their bottom line.