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Canadians are Determined to Spend Less but Shop Smarter this Holiday Season
While U.S. retailers eagerly await Black Friday sales results, BMO Bank of Montreal and the AIR MILES Reward Program offer insights into Canadian holiday shopping intentionsA recession will constrain holiday spending.
Almost one in five Canadians stressed about not having enough money for gifts: will turn to loyalty points to supplement their gift-giving.
40% of Canadians polled expect to carry a credit card balance on their holiday shopping for six months or more.
TORONTO, November 28, 2008 – It’s beginning to look a lot less like Christmas-past, according to BMO economists and AIR MILES Reward Program research analysts who project this holiday spending season may be the softest since the early 1990s. Despite a marked decline in consumer confidence, Canadians’ gift-giving intentions haven’t waned.
“Retail sales have weakened across the country versus last year’s strong pace,” said Sal Guatieri, Senior Economist, BMO Capital Markets. “With the economy likely slipping into recession, we believe this will be an extremely soft holiday spending season – possibly the softest since the early 90s’ downturn - and we don’t see a meaningful recovery in consumer spending until the second half of next year.”
According to a recent survey conducted by BMO and the AIR MILES Reward Program, almost a third of Canadians polled (32 per cent) plan to spend less this holiday season compared to last year, pointing to current economic conditions as the reason. Nonetheless, most are hopeful that by taking advantage of retailer discounts and redeeming a built-up bag of loyalty rewards they may still be able to put more gifts under the tree.
More than 65 per cent of survey respondents felt it was appropriate to give gifts that were purchased with miles or points.
40 per cent of those who indicated they intend to redeem loyalty points to acquire holiday gifts said they do not have enough money to purchase gifts.
Canadians across Canada expect to carry a credit card balance longer
Many Canadians expect to carry a credit card balance on their holiday shopping for six months or more:
Nearly a quarter of respondents in Atlantic Canada (22 per cent);
Fourteen per cent of Western Canadians and Ontario residents; and
Nine per cent of Quebecers.
Nancy Marescotti, Director, Card and Retail Payments, BMO Bank of Montreal, cautioned shoppers not to stretch too far beyond their means. “If you have to carry a balance on your credit card, use a credit card with a low interest rate or transfer your balance to a low-rate card or low-rate line of credit,” she advised.
She said that BMO MasterCard customers can add the low rate option to their account. New BMO MasterCard customers can also choose a low rate option when they apply for the card. “BMO’s low rate option is always available and you don’t have to give up a premium rewards program to get it.”
“Given consumer confidence levels, now is the time for shoppers to take advantage of the high-value reward redemptions that are available within loyalty program reward portfolios,” said Neil Everett, Chief Marketing Officer, AIR MILES Reward Program. “By doing this, they can refocus their priorities of where and how to spend their discretionary dollars.”
“It can be tough trying to rein in spending during the holidays,” said Lynne Kilpatrick, Senior Vice-President, Personal Banking, BMO Bank of Montreal. “But being a smarter shopper is probably the most effective way to manage your spending this holiday season.”
Ms. Kilpatrick suggests the following holiday shopping tips:
Cap your Spending -- Develop a budget and stick to it.
Become a Coupon Junkie -- Take advantage of free merchant coupons and discounts.
Set your Clock – Don’t wait until the last minute to do your shopping. You’re more likely to overpay for items and you run the risk of not finding what you’re looking for.
Supplement your Spend -- Look to Loyalty programs with robust reward portfolios – such as the AIR MILES Reward Program – and redeem for gifts to supplement holiday spending.
Buy Online – avoid the crowds and stick to the items on your list. For AIR MILES Collectors consider www.airmilesshops.ca. Pay close attention to shipping dates and build in extra delivery time so you won't be disappointed.
Just Say No –You may not need the extended warranty. Check with your credit card company for features such as extended manufacturer warranties, or protection against loss or theft so you’re not caught with an empty stocking.
Debt Consolidation --After the holidays, you should always pay your balance in full by the due date to avoid interest charges altogether. If you expect to carry a balance however, minimize your overall costs by making purchases with a low-interest credit card or by transferring your balances to a low-interest line of credit.
Source: BMO
