In 2014, it was reported that about one in five Canadian retailers were planning a dedicated Black Friday sale, and 61 per cent of Canadian shoppers are planning to hit the stores that day.
Although some argue that the penetration levels of the U.S.-based holiday sales in Canada are low, it is undeniable that many have gotten on board. Consumers are eager to find discounts, and retailers are happy to offer discounts if it results in increased shopping volumes and higher revenues.
Statistics also support the growing popularity of these shopping events: Black Friday beat out Boxing Day in 2014 with total sales being up 5 percent from 2013, which is remarkable because unlike Boxing Day, Black Friday is not a holiday in Canada.
Some of the more prominent reasons include:
- Competition from the south – Canadian retailers want to avoid losing sales to U.S. companies. Many Canadians are taking advantage of deep discounts during these popular shopping days south of the border. Shoppers living in close proximity to the U.S. will only be persuaded to shop locally (or online), if the Canadian businesses offer comparable discounts (especially given current exchange rates).
- Beating the cold – Going online to shop on Cyber Monday allows Canadians to avoid the harsh weather around the holidays.
- International fairness – Many Cross-border companies offer Canadian shoppers the same discounts offered to U.S. shoppers to ensure consistent messaging. This means supporting Black Friday and Cyber Monday sales in Canada. Competing domestic retailers must follow suit in order to keep up.
And while most Americans are satisfied enough with national sales events to stay within U.S. borders, the weak Canadian dollar may sway shoppers in a new direction this holiday season - up north.
In July 2015, the Bank of Montreal predicted that the Canadian dollar would slide to about 75 cents (U.S.) in the Fall, opening new doors for Canadian exporters and luring U.S. shoppers to Canada. The Loonie is currently hovering right around the predicted value, which will further encourage Canadian businesses to host sales and promotions around the U.S. holidays to draw in neighboring shoppers.
Sales for the entire four-day weekend in Canada (which begins with Black Friday and ends with Cyber Monday on November 30, 2015) showed 4.32 percent growth in 2014 over the same weekend in 2013. Canadian consumers are also shopping more in the week leading up to Black Friday, with a nearly 5 per cent growth year over year.
So what have Canadians been buying during this big shopping weekend?
According to Moneris' Q4 2014 Spending Report®±,
Canadians are spending significantly more on transportation, with overall spending on transportation rising 11.4 per cent in Q4, likely due to holiday travel. In particular, taxicabs and airlines experienced growth increases of 9.8 per cent and 5.9 per cent respectively.
Food and entertainment
Sales at fast food restaurants and dine-in restaurants both increased (+7.8 per cent and +5.4 per cent, respectively) compared to the same period in 2013. Strong November growth (+11.3 per cent) at household stores led the category to an overall increase of 6.5 percent. Consumers spent less on entertainment in the last quarter of 2014 than the previous year (-0.9 per cent).
Sales at sports apparel stores rose 8.5 per cent in Q4 last year, compared to the previous year. Shoe stores and the luggage and leather goods category both posted gains of nearly 5 percent.
The expansion of Black Friday and Cyber Monday sales into other business areas is expected, similar to the progression of the holidays for our neighbours to the south.
In the U.S., electronics and popular toy items are among the biggest sellers on Black Friday. This year, Apple is expected to have one of the biggest Black Friday promotions ever, particularly given the appeal of the Apple Watch as a holiday gift. What’s more, big box stores like Target, Walmart and Toys R Us all host early opening hours that usually gather crowds as early as 3am. Other Black Friday/Cyber Monday sale customs include: pop-up promotions, giveaways and raffles, and partnerships with other businesses and organizations that set up in-store sales (i.e. baked goods, holiday wreaths, handmade items, etc.).
Accenture's 2014 holiday shopping survey found that one-third of Canadian shoppers expect to find the best deals on Black Friday, with an equal number looking forward to Boxing Day. That's a big shift from the previous year, when the same survey found only 23 per cent of Canadian shoppers expected the best deals on Black Friday.
If the growing trend towards Black Friday shopping continues, Canadian merchants may start feeling the pressure to adopt similar practices. In the meantime, you can prepare your business for holiday shopping and start taking a share of the revenues reaped during this informal holiday shopping “kick off” weekend that has been borrowed from our U.S. neighbours.
The information in this article is provided solely for informational purposes and is not intended to be legal, business or other professional advice or an endorsement of any of the websites or services listed. ± This information is based on aggregated credit and debit card transaction data. The percentages cited are derived from actual sales volumes—the dollar values of credit and debit card transactions being processed by Moneris merchants during the stated time period —compared with sales volumes from the prior year.