Inflation is changing Canadians’ shopping habits

Local Toronto businesses noticed more foot traffic at their stores this holiday season, but consumers are tightening the purse strings amid soaring inflation and an impending recession.

Compared to last year’s holiday season, which experienced a lockdown due to the Omicron variant, this year was already a positive step forward with in-person shopping, said Eric McCall, co-owner of Another Story Book Shop on Roncesvalles Avenue.

“We were able to get people into the store and weren’t short on staff,” he said. But shoppers were careful with spending.

“If you’re worried about putting food on the table, books might not be a priority,” McCall added.

Inflation and concerns about the impending recession are changing Canadians’ shopping habits, said Michelle Wasylyshen, spokesperson for Retail Council of Canada (RCC).

A recent study by the RCC found that six in 10 Canadians are feeling financial strains, with 62 per cent saying their gift-giving habits have changed over the years. The main reason: they are looking to buy more meaningful gifts for fewer people.

Around 60 per cent will look for more deals this year than in previous years, and many will consider a wider assortment of retailers to ensure they find the best gifts at the best prices, the survey said.

“While people might buy fewer gifts or be looking for more deals, they are looking to shop in person and to get into the festive holiday spirit,” Wasylyshen said. “Online shopping is still important, but people like to touch and feel the products in the store.”

Jeff Barber, owner of record store Sonic Boom on Spadina Avenue, said he saw a 20 per cent increase in foot traffic this year compared to 2021, and holiday shopping picked up in November.

“The year was already trending in a positive direction, so the holiday shopping was bang on what we hoped for,” he said. It’s a boon for Toronto businesses that are dealing with soaring rent, inflationary pressures, and pandemic losses.

With talks of an recession in the new year, even a strong holiday season leaves Barber unsure of sales in 2023.

“We’ve been in business for 22 years and outlasted two recessions, and it’s because we offer a good price point and an alternative to luxury purchases,” he said. “We hope that continues to work in our favour.”

While Boxing Day and holiday purchases help Sonic Boom’s profits, the store isn’t heavily reliant on seasonal shopping, unlike some others.

For example, post-pandemic, up to 80 per cent of annual sales for toy stores rely on holiday shopping. Apparel, chocolate, flowers and books are also dependent on holiday sales to get through the year, while electronics and furniture perform well during Boxing Day sales, Wasylyshen said.

Forty per cent of annual sales at Stubbe Chocolates on Dupont Street stem from holiday shopping, said owner Daniel Stubbe.

His business had a quiet fall, making Stubbe nervous about holiday spending.

“We tend to do okay during economic downturns because chocolate is an affordable luxury and an easy gift for the holidays,” he said. “At first, people were watching their wallets a bit more when grocery prices really shot up earlier this year, but business really picked up in December.”

The 24 days leading up the holidays are vital for the store’s survival, he said. “We cannot afford to have a bad Christmas,” he added.

The business still faces supply chain issues, with products failing to be delivered. Luckily, because the business is small, it can pivot to different suppliers quickly. But it’s still an added stress during a busy time of year, Stubbe said.

Ryan Mallough, the Canadian Federation of Independent Business’s vice-president of legislative affairs, Ontario, said businesses face a plethora of challenges in the pandemic recovery, extending the post-pandemic period for many workplaces.

“More than half of businesses are not back to normal business levels and 58 per cent are carrying pandemic-related debt averaging more than $114,000,” he said. “So many businesses cannot absorb higher costs or fewer sales.”

When the last lockdown in Toronto ended in February 2022, Mallough said, businesses were hopeful the economy would recover, but the war in Ukraine has impacted gas prices, and the geopolitical turbulence in Europe and China has disrupted supply chains.

“We have more challenges on top of two incredibly difficult years,” he said. “We are no longer in a world that will go back to how things looked in 2019.”

And with more consumers going online, people are feeling disconnected from their local shops and community spaces that are integral to a healthy city ecosystem, he added.

“Now that we can go back out to shop locally in the community, we need to see there is not just economic value in that practice, but there is also societal and cultural value to it as well,” Mallough said. “The support can be shown financially or by word of mouth.”

Because of shifting spending habits, many Toronto businesses didn’t see foot traffic increase.

Zackary Ibrahim, owner of Lost Boys Vintage in Kensington Market, said it was “slower than expected” for many retailers, including his own.

“We did well online, we’re up in sales compared to last year, though we have twice as much product,” he said.

Slow months during what is typically a busy shopping season is concerning, Ibrahim said. Many shoppers want to only buy items on sale.

“It’s tough out there,” he said. “Groceries are expensive, rent is expensive. We’re struggling in Toronto because our salaries don’t match the high cost of living here.”

To help staff, he’s tried implementing a tipping system because his employees work long hours, but customers have resisted the policy.

He’s also aware that Kensington is not necessarily a winter destination. During the warmer months, clothing racks are outside where pedestrians fill the streets, bringing in more business.

“We’re more a summer hot spot, but it’s important that people go out and support local businesses and engage with the community businesses,” Ibrahim said. “Otherwise we all suffer.”

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