Canadians are planning to cling tighter to their wallets this year.
Eighty six per cent of Canadian consumers adopted a “bargain shopping” mindset searching for sales over the past 12 months, according to a survey done by the Boston Consulting Group (BCG). The researchers defined “bargain shopping” as engaging activities like shopping around to compare prices, purchasing fewer luxury products, buying fewer items overall and buying more when a deal is available.
Along with that, 89% of respondents plan to spend the same or less within the next year.
This includes 63% saying they’ll cut significantly on non-essential items, 69% saying they’ll defer major expenses and shop around for the best prices and 77% saying they’ll pay more attention to sales. These results have increased by about five percentage points or more compared to a survey done in 2009.
Cash flow is one of the main reasons why consumers are restricting their spending. With many Canadian households taking on record amounts of debt, it’s about time.
“If you look at debt as a potential disposable income in the U.S., the U.K. or any other major economy people have started saving a bit more and cutting back,” said Cliff Grevler, partner and managing director of the BCG and head of Canadian consumer practice. “Whereas Canadians have kept on spending and I think that’s the area of concern.
“People are cutting back to save more to reduce their debt load whereas before they were cutting back just as a precaution.”
Some of the products consumers plan to spend less on include mobile phone contracts, fast food and personal clothing. They plan to spend more on fresh food, travel and purchases for the home.
Consumer spending makes up a hefty chunk of the country’s GDP, but Grevler said this change in attitude won’t be enough to put much of a damper on the economy.