Although similarly experiencing food and fuel price increases, American and Canadian neighbors are displaying different shopping habits. According to new global research from Boston Consulting Group, to be released in June, Canadians are feeling frugal, while Americans are spending with confidence. Boston Consulting’s data shows, “a six percent increase among Canadians (63 percent overall) who say they plan to shave their spending on non-essentials in the next year compared with a 19 percent drop among Americans (62 percent overall) who will do so.” The reason? Most Americans are more confident about spending than they were two years ago, seeing a turnaround in the economy as April was the tenth month in a row with slow but steady growth.
Canadians Saving Out of Necessity
Canadians, according to Marina Strauss, retailing reporter for The Globe and Mail, “are still feeling financially strained as policy makers, including Bank of Canada Governor, Mark Carney, warn against the dangers of taking on too much debt.” Among the consumers in the 19 countries surveyed, Canadians were second in their tendency to invest in bargains or purchase products for a deal. “Canadians did not modify their spending behavior as much as Americans over the downturn, which fueled Canada’s economic recovery, but now Canadian consumers are cutting back out of necessity,” says Cliff Grevier, partner and managing director at Boston Consulting, in a recent interview with Strauss. But is the frugal behavior sparked by real financial factors?
Much like the U.S., Canada felt the effects of unseasonable spring weather, keeping shoppers from local storefronts. Nonetheless, first quarter results were weaker in Canada than in the U.S. with a fall in sales for the apparel, home improvement and office supplies markets. Strauss adds, “Other retailers whose first quarter sales were weaker in Canada than in the U.S., include discounter TJX Cos. The outlook for the coming months isn’t much better. Expected interest rate hikes later this year could scare away shoppers.”
For more information on the Boston Consulting research, click HERE.