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Canadians Want Loyalty Programs, Says KPMG Study About Holiday Shopping

It’s the time of year when study after study is released discussing what the holiday shopping season will be like. Some suggest it’s going to be a tough year with Canadians tightening their wallets while others say Canadians are poised to spend more. One especially interesting detail that comes out of the KPMG in Canada survey, however, is that loyalty programs are proving increasingly important when it comes to where Canadians are shopping this year.

The survey found that 78% of Canadians are opting to shop at retailers that offer loyalty rewards programs, with over half (55%) saying that they are worth giving up their personal information. In fact, 70% are not worried about their information being compromised when signing up for rewards programs. Although the majority (93%) think retailers should be more transparent in how they protect and store personal data. 

What else did the study find? Eight in 10 Canadian consumers are being more careful about how they spend their money this holiday season. By gender, that’s 80% of men versus 87% of women.

According to the survey, 83% of Canadians are more cautious about what they are spending money on this year compared to last year, given high inflation, interest rates and mortgage costs. What’s more, 62% are frustrated by their online shopping experience with over two-thirds wanting to see retailers think outside the box to replicate online that in-store shopping experience. 

“Our survey shows that this holiday season will be more challenging for retailers,” says Kostya Polyakov, Partner and National Leader for Consumer and Retail, KPMG in Canada. “With so many Canadians navigating a financial tightrope and frustrated by their shopping experience, retailers need to sweeten their offers and provide a better environment. It’s the only way that they will be able stand out from their competitors and drive sales during what’s typically a make-or-break period for them.” 

Seventy per cent of Canadians say they don’t plan on spending as much on discretionary items as they did in previous years, including travel, apparel, electronics, entertainment, toys, and restaurants (67% of men vs. 73% of women); and 66% indicated they plan to only spend on essential goods this year. This is particularly the case for those aged 45 to 55 (typically known as the sandwich generation – caring for their aging parents while raising children), at 74%, and those aged 55 to 64 at 75%.

“These financial pressures have significantly shifted spending patterns, with most Canadians opting to economize and really prioritize any discretionary purchases to what matters the most to them,” adds Polyakov. “But that’s about it, with seven in 10 consumers planning to cut back and tighten their belts.”

Sixty-six per cent will “only be spending on essential goods this holiday season, like groceries, personal care products, and prescriptions.

Where will Canadians be shopping? The survey findings show Canadians are frustrated with both their in-store and online shopping experiences. As many as 68% of Canadians say they prefer to shop in-person but find the in-store selection and merchandise “just doesn’t compare” to what they can find online. Similarly, 62% are “frustrated by the online shopping experience” saying either “the product is not what was advertised or returning the merchandise is inconvenient or costs too much.” 

“Retailers are increasingly trying to offer the best of both worlds to consumers,” says Polyakov. “They are creating phygital shopping experiences that seamlessly merge the physical and digital realms. While it’s clear Canadians love to go shopping, they expect a superior, personalized online customer experience from their retailer’s website. Retailers need to stay a step ahead through data and technology to improve sales and encourage brand loyalty to keep customers coming back.” 

The poll also found that 67% think retailers need to think outside the box to replicate online the in-store experience, like using virtual reality dressing rooms with augmented reality and artificial intelligence (AI) to see what an outfit looks likes without physically trying it on.

The KPMG in Canada surveyed 1,507 Canadians from October 20 to November 2, 2023 on Sago’s premier AskingCanadians online panel.