Good morning, it’s Susan, The Globe’s retail reporter. Tomorrow is Black Friday, but if you’re not exactly in the spending spirit, you’re hardly alone. Below, we dive into why consumers are cutting back, while retailers are trying to remind shoppers: ‘Tis the season to be jolly. Plus, more news and analysis on what to make of Donald Trump’s tariffs announcement. But first:
In the news
The federal government is pledging to boost spending on the border after an emergency first ministers’ meeting last night in response to U.S. president-elect Donald Trump’s promised tariffs.
Canada Post will strike for the foreseeable future as negotiations break down and special mediation is temporarily suspended.
Alberta’s plan to defy Ottawa’s emissions cap on oil and gas producers includes significant government overreach, legal experts say, and raises disclosure questions for energy companies.
Neo’s $110-million equity financing was led by China’s Tencent, which was not revealed when the deal was first announced.
Happening today
- Germany reports its consumer price index for November, putting a spotlight on a struggling economy ahead of a snap election in the new year.
- U.S. stock markets are stuffed and in need of a Thanksgiving nap.
In focus
Sales aren’t satisfying like they used to
The week of American Thanksgiving is upon us, bringing with it another kind of feast: the wave of consumption sparked by Black Friday and Cyber Monday sales.
But, while inflation may have slowed, all we have to do is look at our grocery receipts (or mortgage statements, or the shocking bill for a modest dinner out with friends, yikes) to be reminded of how much less affordable everything is compared with just a couple of years ago. Happy holidays?
Shoppers in search of Black Friday sales in Toronto, 2021.Tijana Martin/The Canadian Press
Why is this such a nerve-wracking Black Friday for retailers?
Consumer sentiment is still in the dumps. Discounters such as Walmart are doing well, but a number of other big retailers have signalled they expect a tough holiday season, with shoppers holding back on purchases and stores offering big discounts to compete for people’s gift budgets.
But that’s just one of the complications
Online complications: The Canada Post strike means retailers are facing higher costs for online sales, as they are forced to offer shipping alternatives to ensure purchases arrive on time. And while many are assuring customers they have contingency plans, fears about order delays could be keeping some e-commerce shoppers on the sidelines. That’s bad news for small businesses that do all or most of their sales online.
Tax complications: Aaaaand Ottawa’s recent moratorium on sales taxes plan for some products could also make life difficult. That tax break doesn’t start until Dec. 14, which is cutting it awfully close for an e-commerce gift purchase. And brick-and-mortar stores will have to reconfigure their payment systems to make it work. Spare a thought for the retail workers facing questions from irate consumers about when the moratorium begins, and why it doesn’t apply to the particular gift they are buying.
Calendar complications: The Black Friday sale falls later in the calendar than usual this year, which has given people more incentive to wait for deeper discounts. Retailers have been trying to draw them in with “early Black Friday” deals throughout November, and this is turning into a promotion-heavy holiday season as stores try to win over shoppers.
Remember when early morning Black Friday customers were greeted with cheering? This is back in 2018 at Best Buy in Downtown Toronto.Stephanie Lake/The Canadian Press
Are people really going to spend less?
It depends on who you ask. A recent poll of 1,501 Canadians by Angus Reid Group found that just under half of respondents – 46 per cent – are planning to spend less this year, while about the same number expect their holiday budgets to be roughly flat. Only 8 per cent said they planned to spend more.
Another survey of 2,500 people by Deloitte Canada, found that shoppers do plan to spend slightly more this year – but the results came with a couple of important caveats:
- First, we’re still well below prepandemic spending, so big picture, holiday budgets have not rebounded.
- And second, much of the spending bump is going to travel, while gift purchases are only set to rise just above inflation. (So it’s not that people are planning to buy more gifts; those presents are just getting more expensive.) Overall, 71 per cent of people said they would change their shopping habits to keep a tighter grip on their budgets. Cue the added promotions.
“I do think it’s going to be a pretty hot post-Black Friday shopping season, and retailers are going to have to fight extra hard to get their share,” Deloitte Canada’s national retail consulting leader, Marty Weintraub, told me.
One bright spot
Charitable giving is expected to rise significantly, according to Deloitte. It’s enough to make a grinch’s heart grow a size or three.
For more on how businesses are bracing for cost-conscious shoppers, you can keep reading here.
Charted
Tracking the tariff effect
In a recent report for the Canadian Chamber of Commerce, the University of Alberta economist Trevor Tombe analyzed the potential impact if President-elect Donald Trump followed through on his election campaign promise to impose a 10 per cent across-the-board tariff on Canadian products. Now that Trump has vowed a larger 25-per-cent tariff, Tombe updated his findings to show what would happen to specific sectors if that tariff were imposed, as well as what would happen if Canada fully retaliated.
Jason Kirby created this chart, showing the top 10 sectors that would be impacted under both scenarios, and the projected decline in exports to the U.S. for each sector as a share of their total output.
More tariff reading:
- Canada’s agricultural producers could be severely bruised by tariffs on exports to the U.S.
- Experts say what you should and shouldn’t do with your money after tariffs warning
- Ontario to spend tens of millions on U.S. ad campaign highlighting both countries’ close economic ties
- Opinion: Is Trump’s tariff threat serious? Maybe. But if we panic, we’ve already lost
- Opinion: To counter Trump’s tariffs, listen to Doug Ford – but not for the reason you’d think
The outlook
On our radar and reading list
Honest feedback: How to spot real product reviews from the fakes to help guide your shopping for Black Friday and this holiday season.
Human rights: An Ontario court has dismissed civil suits against Barrick Gold Corp. that alleged it was responsible for human rights abuses at a Tanzanian mine.
Health hole: Brookfield Asset Management abandons plan for €6.45-billion takeover of drug maker Grifols after failing to agree on the purchase price.
Housing for all: The Deafblind community has started construction on a new project to build 56 new apartments.
Morning update
Global markets edged higher as investors eyed the next U.S. Federal Reserve interest rate moves after a wave of economic data pointed to persistent inflation. Wall Street markets are closed for Thanksgiving, while TSX futures pointed higher after yesterday’s fresh record close.
Overseas, the pan-European STOXX 600 was up 0.33 per cent in morning trading. Britain’s FTSE 100 inched 0.07 per cent higher, Germany’s DAX gained 0.52 per cent and France’s CAC 40 advanced 0.37 per cent.
In Asia, Japan’s Nikkei closed 0.56 per cent higher, while Hong Kong’s Hang Seng dropped 1.2 per cent.
The Canadian dollar traded at 71.38 U.S. cents.