Retailers in Canada are cashing in on what has traditionally been an American event - Cyber Monday and Black Friday shopping. The spending spree that usually occurs the day after American Thanksgiving has been getting increasingly popular as retailers in Canada ramp up their sales to keep residents spending here rather than in the U.S.
A recent survey by BMO find almost 50% of Canadians plan to take advantage of Black Friday deals here in Canada on November 29th. That number is up 15% from last year. The BMO holiday spending outlook now reveals the volume of sales on Black Friday are quickly catching up to Boxing Day sales. If you're heading out this week for some Black Friday shopping, here is what you need to know.
Canadians surveyed for the study said they were planning to spend an average of $292 on Black Friday purchases in Canada. This can be dangerous for anyone already carrying a substantial amount of debt. Earlier this month a study by the credit reporting agency TransUnion showed the average consumer debt load is currently $27,355 (excluding mortgage debt). That debt load has steadily increased, up $225 from the last report earlier this year. If you’re in debt, it's probably best to stay away from Black Friday sales, but if your finances are in control, make sure you set a spending limit in order to resist temptation once you hit the stores.
The holiday season is the busiest for retailers across Canada. Last year, retailers did $38.6 billion in sales in December. Traditionally, holiday shopping in November and December make up about 20% of retailers total sales for the year. Since the financial crisis in 2008, consumers have been less likely to overspend therefore forcing store owners to deeply discount items before December 25th. This is partly why stores have embraced Black Friday.
Consumers shopping during this time should keep in mind retailers are keen to move their merchandise and with holiday sales lagging the deep discount will persist through December. Don’t get caught up in the hype of Black Friday - there will be other opportunities before Christmas to buy items on sale.
With the Canadian dollar almost at par, it's less attractive for Canadians to cross the border to shop, especially if retailers are offering discounts here. But there are other advantages of shopping close to home. When buying gifts, you want to make sure you get the right size, colour and style for your friends or loved ones. If your gift does not check all these boxes it will be hard to exchange and may go unused, which is total waste of money.
There is also a cost to cross the border, paying for the price of a hotel room and meals out, all of which can be avoided by staying close to home. The biggest advantage of shopping in Canada is your are helping our economy; even though sales were high last holiday season there were still weak compared to years gone by. BMO Economics is forecasting an increase of nearly two per cent in holiday retail sales this year.
“Canadian retailers are rising to the challenge of the lure of cross-border shopping, as they look to deal with the Canadian dollar still not far from parity, a significant – although narrowing – gap between Canadian and U.S. retail prices and the more generous duty-free limits,” said Doug Porter, Chief Economist, BMO Capital Markets. All this will mean a very busy Friday November 28th at malls across Canada. If you find crowds stressful and you tend to make rash decisions it would be best to stay away from what it expected to be an unprecedented shopping day in Canada.