WITH holiday shopping season These days, many Canadian consumers are looking to tick off the boxes on their gift list while keeping their household budget in check.
Shoppers may be more cautious when opening their wallets, wary of what the future may hold, and looking for opportunities to save money wherever they can.
The trade war—especially its ripple effect—has led to consumer concerns about costs.
“Consumers are being cautious heading into the holidays because they're facing a number of headwinds, particularly the fallout from the trade war, but also the fact that trade concerns stem from companies being really cautious about hiring right now,” said retail analyst Bruce Winder.
“Consumers are feeling it, and they're in the same boat. They're very selective about what they spend on now. They're very cautious because they're nervous about losing their jobs.”“
A PwC report Data released last month showed that on average Canadians said they planned to spend 10 per cent less than a year ago, with 81 per cent of respondents saying they planned to spend less.
Some retailers say shoppers are looking for value, discounts and lower prices overall.
Dollarama shares rose in price In recent years, the company has emphasized in its quarterly earnings report that “consumables” were driving sales growth.
This means some shoppers may skip trips to the grocery store in favor of visiting retailers like Dollarama, which potentially offer lower prices on food and other items.
Citing customers prioritizing “need” Costco also made adjustments by reducing holiday displays in stores to make more room for essentials like food rather than non-essentials like Christmas trees, lights and toys.
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If customers prioritize buying essentials, it could mean a different approach to holiday shopping and gift buying.
“Loyalty programs can certainly help Canadians on a tight holiday budget, but how and where you redeem rewards matters. Make a list and stick to it,” says personal finance expert Shannon Terrell of NerdWallet Canada.
“To make glasses work for you this holiday season, you need to use the resources at your disposal as strategically as possible.”
Do loyalty and points programs really work?
Loyalty programs can be a good way to save money, but it's important to choose the right ones, have a good strategy and be consistent to get the most out of them.
Whether loyalty programs lead to savings depends on many factors, as each consumer has different needs and preferences when it comes to purchasing household essentials and other items, including gifts.
“Consumers, whether they are in a loyalty program with a retailer or not, surprisingly show no discernible difference in their level of loyalty to retailers,” says Doug Stevens, founder and CEO of Retail Prophet.
“Most of the time, we choose a grocery store because it satisfies our needs and is relatively convenient to get to. Loyalty programs don't really promote, at best, anything more than transactional loyalty. In many cases, retailers give people incentives they probably didn't need in the first place.”
Some loyalty programs that offer cash back and points systems can put money back into consumers' pockets as long as it is used consistently and redeemed effectively.
“Cash back programs are especially convenient this time of year because many of them allow you to apply accumulated cash back dollars directly to your outstanding credit card balances—a potential game-changer for those already in debt,” Terrell says.
“Avoid cashing out rewards for something you never intended to buy just because it seems like a 'bargain,' and be aware of any redemption offers that require you to spend more to redeem.”
For many consumers, loyalty programs that require paid membership may also offer greater value compared to free programs.
“Often, paid loyalty programs are much more effective. When a program is free, you can conclude that it doesn't really provide significant value,” says Stevens.
“If I'm paying for an Amazon Prime membership, there's an implied value, so I'm more inclined to go out and shop on Prime Days. Costco's membership renewal rate is about 90+ percent, so people clearly feel like they're getting value from their paid membership.”
Whether retailers offer paid or free loyalty programs, it is important to remain consistent with those retailers to maximize savings over time.
“Here’s the problem with loyalty: If it’s a one-time thing, if you buy something once a year or once every two years and you don’t do it often, then loyalty won’t work,” Winder says.
“Loyalty works well when there are a lot of buyers in a category, and when you combine several of those categories and create an ecosystem, then loyalty offers good value. Also, it doesn't necessarily offer good value.”
Winder says the “ecosystem” can create a lifestyle and routine that suits an individual who takes advantage of multiple locations and a family of stores.
“I'll use my life as an example. I'm in the PC Optimum program with Loblaw, and it works for me because I can buy food at No Frills, I can get gas at Esso, and I can buy medicine, drugs, health and beauty products at Shoppers Drug Mart,” Winder says.
“When I get into that rhythm of going through all three of them, I can start accumulating significant savings on things – I can see the savings and points adding up.“
Winder adds that these examples may not work for everyone and that it only makes sense if it makes sense for an individual or family to join a specific loyalty program that they plan to use regularly.
“Try to find a loyalty program that fits your lifestyle where there are a lot of shoppers. It gets a little overwhelming if you have too many loyalty programs that may or may not push you in a direction you don't want to go,” Winder says.
“If you're buying a gift for a loved one, and it's a one-time gift, you probably don't need a loyalty program. Just find the best deal on the market for you.”
