Canada The Budget Shopper Market Report 2023

Overview

• What you need to know
• Key issues covered in this Report
• Definition

Executive Summary

• Top takeaways
• Market overview
  • Figure 1: Category outlook: budget shopping, 2023-28
• Opportunities
• Canadians want flexible spending
• Consumers seek out great value
• Challenges
• Certain categories are more vulnerable to external market factors
• The circular economy is a threat for stakeholders that don’t leverage it

Target Audience – By the Numbers

• Canadians’ personal finances impact their approach to budgeting
• Financial situations are similar to pre-inflation
  • Figure 2: Current financial situation, 2021-22
• Two in five households have six-figure household incomes
  • Figure 3: Household income, overall vs single and dual income households, 2022

Market Factors

• The economy is dictating consumers’ budgets
• Inflation continues to be above standard levels
  • Figure 4: Consumer price index, all items, food and energy, January 2019-October 2022
• Economists predict a recession in 2023
• Economic gaps are widening
• Housing costs are putting more pressure on budgets
• Home ownership is still out of reach for many
• Rental rates spike amid low vacancy rates
• eCommerce facilitates price competition
• Climbing interest rates affect budgeting decisions

Competitive Strategies

• Categories vulnerable to budget cuts find ways to provide good value
• Foodservice uses all-inclusive to give consumers a sense of value
  • Figure 5: UBER ONE – That Guy, Zach Cherry | Uber Eats, September 2022
• Budget-friendly clothing brands see their chance to make a move
  • Figure 6: GU USA Instagram post, November 2022
• Companies are integrating the circular economy
  • Figure 7: Out&Back Outdoor Instagram post, March 2022
• Financial institutions are giving consumers the tools to budget
  • Figure 8: NOMI Find & Save in the RBC Mobile1 app, February 2020
• Buy now, pay later companies offer flexibility
  • Figure 9: Uplift Instagram post, October 2022

The Budget Shopper – Fast Facts

Canadians’ Approach to Budgeting

• Half of Canadians have a budget, but most track finances loosely
  • Figure 10: Current approach to budgeting, 2022
• Budgeting extremes: strict budgets versus no budgets and no oversight
  • Figure 11: Current approach to budgeting, by current financial situation, 2022
• Racial differences are evident
  • Figure 12: “I follow a strict budget”, Chinese and South Asians Canadians vs overall Canadians, 2022
• Young consumers who are dependent on their parents are not watching their finances
• Most Canadians live in the middle ground
  • Figure 13: Current approach to budgeting, men vs women, 2022
• • Figure 14: Current approach to budgeting, by age, 2022
• • Figure 15: Current approach to budgeting, by financial situation, 2022
• Most consumers think of themselves as frugal
• Young consumers are the least likely to consider themselves frugal
  • Figure 16: “I consider myself a frugal person” (% agree), by age, 2022
• Inflation is affecting budgeting
  • Figure 17: Current approach to budgeting, 2020 vs 2022
• Most Canadians are feeling the pinch from inflation
  • Figure 18: Effect of rapid inflation on spending habits, 2022
• Older consumers are the most insulated from inflation effects
  • Figure 19: Effect of rapid inflation on spending habits: little to no change, by age, parental and employment status, 2022
• Inflation is a nuisance for some, a crisis for others
  • Figure 20: Effect of rapid inflation on spending habits, by financial situation, 2022
• • Figure 21: Effect of rapid inflation on spending habits, by approach to budgeting, 2022

Budgeting Across Product Categories

• Categories where consumers would not make any changes
  • Figure 22: Budget approach to categories: “I would not make any changes”, 2022
• Categories where consumers will buy the same amount, but look to cut costs
  • Figure 23: Budget approach to categories: “I’d find ways to spend less, but buy the same amount”, 2022
• Categories that consumers would buy less of
  • Figure 24: Budget approach to categories: “I would buy less of it”, 2022
• • Figure 25: “Food the way it ought to be, Priced the way it USED TO BE!” Chuck’s Roadhouse Bar and Grill, November 2022
  • Figure 26: Lululemon Instagram post, November 2022
• Certain foodservice categories are more vulnerable than others
  • Figure 27: Foodservice responses to rapid inflation, 2022
• Categories that consumers will stop buying entirely
  • Figure 28: Budget approach to categories: “I would stop spending money on this entirely”, 2022
• Certain consumer groups will be more reluctant to cut back on spending
• Men are more likely than women to keep spending the same amounts
  • Figure 29: Budget approach to categories: “I would not make any changes, men vs women”, 2022
• Targeted opportunities to resonate with consumers open to spending

The Circular Economy as a Budgeting Tool

• The second-hand market will increase supply and demand
• Tighter finances mean greater interest in the second-hand market
  • Figure 30: Ways of supporting personal budgets: second-hand market, by financial situation, 2022
• • Figure 31: H&M Instagram post, August 2019
• Women are more open to second-hand markets than men are
  • Figure 32: Ways of supporting personal budgets: second-hand market, men vs women, 2022
• Quebec consumers are less interested in the second-hand market
  • Figure 33: Ways of supporting personal budgets: second-hand market, Quebec vs overall, 2022
• Upcycling and repairs are relevant tactics
• Older consumers are more likely to reuse and repair
  • Figure 34: Ways of supporting personal budgets: reusing and repairing, by age, 2022
• An opportunity to make reusability and durability selling points
• A potential paradigm shift in ownership among a portion of consumers
• Willingness to share or rent varies across cultures
  • Figure 35: Ways of supporting personal budgets: sharing and renting, by race, 2022
• How companies can benefit from this behaviour
  • Figure 36: Home Depot Canada Instagram post, November 2022
• • Figure 37: Husmates Instagram post, February 2022

Approach to Personal Finances

• Credit cards and BNPL alleviate budget constraints
  • Figure 38: Financing tools used (% agree), by financial situation, 2022
• Budgeters who don’t follow their budgets are the most common users
  • Figure 39: Financing tools used (% agree), by approach to budgeting, 2022
• Younger consumers are more likely to carry balances and use BNPL
  • Figure 40: Financing tools used (% agree), by age, 2022
• Racial differences in usage of credit cards and buy now, pay later
  • Figure 41: Financing tools used (% agree), by race, 2022
• Most budgets are self-imposed
  • Figure 42: “My monthly budget is self-imposed” (% agree), by financial situation, 2022
• • Figure 43: Ferrero Rocher Instagram post, August 2022
  • Figure 44: Sandals Resorts Instagram post, October 2022
• Chinese Canadians are the most likely to have self-imposed budgets
  • Figure 45: “My monthly budget is self-imposed” (% agree), by race, 2022

How Canadians Find the Best Value

• Consumers enjoy the thrill of the hunt
  • Figure 46: “I enjoy the ‘thrill of the hunt’ of finding a good deal” (% agree), by household income, 2022
• Most shoppers compare prices while in store
• Shoppers with budgets are more likely to compare prices
  • Figure 47: “I regularly compare prices among competitors while shopping in store” (% agree), by approach to budgeting, 2022
• • Figure 48: “I regularly compare prices among competitors while shopping in store” (% agree), by impact of recent inflation, 2022
• An opportunity for loyalty programs
• Budgeters and people affected by inflation are strategic loyalty members
  • Figure 49: “I use loyalty programs strategically” (% agree), by approach to budgeting, 2022
• • Figure 50: “I use loyalty programs strategically” (% agree), by impact of recent inflation, 2022
• • Figure 51: Triangle Rewards Instagram post, November 2022

Budgeters Across Retailer Brands

• Canada’s top retailers use different strategies to provide value
  • Figure 52: Retailers shopped at once or more every three months, 2022
• Despite different strategies, retailers have similar compositions of budgeters
  • Figure 53: Distribution of consumers by budgeting approach, by retailers shopped at once or more every three months, 2022
• • Figure 54: Distribution of consumers by impact of inflation, by retailers shopped at once or more every three months, 2022
• ‘Fish where the fish are’

Appendix – Data Sources and Abbreviations

• Data sources
• Consumer survey data
• Consumer qualitative research
• Mintel Trend Drivers
• Abbreviations and terms
• Abbreviations
• Terms