Description

“Anyone can be a budget shopper – even the highest income consumers consider themselves frugal and enjoy hunting for a good deal. Budgets are generally flexible. Consumers seek out value rather than simply adhering to a strict budget. Market factors like inflation create added incentive to find the best possible value.”
Scott Stewart, Associate Director, Lifestyles & Retail

This Report looks at the following areas:

  • How Canadians budget and monitor their finances.
  • Category analysis of responses to tighter budgets.
  • How the circular economy can be used as a budgeting tool.
  • Usage of credit cards, buy now pay later and self-imposed budget limits.
  • Consumer behaviours to find the best value.
  • Retailer usage across consumer groups.

Table of Contents

  1. 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

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