Worst holiday shopping season ever for Canadian online retail

Related stories:
Three magic words that boosted a Canadian firm’s online sales
Holiday shopping at work could harm far more than your productivity
Online retailers buckle down security for holiday season

The economic downturn dealt North American online holiday shopping a severe blow in 2008, with both Canadian and U.S. retailers bearing the brunt of drastically reduced sales.

This ran contrary to predictions made at the start of 2008 that Canadian e-commerce would take off.

Instead, in Canada, online buying was significantly less in the 2008 holiday season than in previous years.

Sixty-three per cent of Canadian shoppers reported they had no intention of making holiday purchases over the Web, according to Deloitte Touche Tohmatsu.

The Toronto-based auditing and financial consulting firm commissioned an independent research company to conduct an online survey of some 2,847 individuals countrywide before Christmas.

While most respondents (53 per cent) indicated they would spend the same amount on holiday shopping as they did in 2007, 40 per cent of consumers said they intended to spend less in 2008.

In 2007, 25 per cent of shoppers said they would spend less than they did the previous year.

The survey found shoppers and Greater Vancouver and Toronto areas were most likely to decrease holiday spending (45 per cent and 46 per cent respectively).
South of the border, U.S. online sales during this year’s full holiday season fell three per cent, according to comScore, marking the first year-over-year decline since the Internet research company began tracking e-commerce in 2001.

U.S. consumers spent US$25.5 billion online between Nov. 1 and

Dec. 23, compared with $26.3 billion during the comparable period last year, which was Oct. 27 through Dec. 18, according to comScore.

Dec. 23 was the last day to purchase with the possibility of delivery by Christmas Eve, the company said. The results fell short of comScore’s prediction before the season, which had called for flat sales.

Although there were some hopeful moments for online retailers, such as a year-over-year sales increase of 15 per cent for the Monday after the U.S. Thanksgiving holiday, the weak economy slowed consumers down, according to comScore.

There were also five fewer shopping days between Thanksgiving and Christmas, the company noted.

And the bad news went beyond just the holiday season.
The fourth quarter as a whole marked the first one since 2001 with lower online sales than a year earlier. Sales for Oct. 1 through Dec. 28 were about $36.8 billion, down four per cent from $38.4 billion in the fourth quarter of 2007, comScore said.

But shoppers visited online stores more often during the holidays, with total unique visitors to all stores, between Dec. 1 and Dec. 24, rising five per cent to just under 180 million.

EBay remained the top e-commerce site in terms of visits, with 85.4 million unique visitors, but it suffered a 4 per cent drop from a year earlier, comScore said. The sites operated by Amazon came in second, with more than 76 million, an increase of about 7 per cent. Wal-Mart trailed in third place, with 51.5 million, but it gained 4 per cent from the previous year.

The biggest winners in drawing shoppers were computer makers: Hewlett-Packard gained 28 per cent, and Apple, the fifth most popular online store overall, saw unique visitors grow 19 per cent. But the ailing Dell had 17 per cent fewer visitors during the holidays this year.

While Canadians may have spent less this holiday season, they took advantage of retail deals, according to a study conducted for Scotiabank by Harris/Decima.

“Seasonal purchasing power has been bolstered by deep price discounts, sharply lower gasoline prices and reduced borrowing costs,” said Aaron Gampel, deputy chief economist for Scotiabank.

On average, each Canadian is expected to have spent $790 this holiday season, down by $117 from 2007, the survey indicated. The figure includes not only gifts, but spending on traveling and entertainment as well.

On gifts alone, Canadians spent an estimated $563 each, down by $133 from 2007.

Two thirds or 66 per cent of Canadians spent their holiday dollars at Wal-Mart, the shopping destination of choice in 2008, according to a survey of 2,000 individuals conducted online by Maritz Research Canada based in Toronto.

The American big-box store was followed by Canadian Tire, 51 per cent; Zellers, 40 per cent; Future Shop, 35 per cent; Sear Canada, 33 per cent; Chatpers/Indigo, 28 per cent; Shoppers Drug Mart, 25 per cent; Best Buy, 19 per cent; The Bay, 17 per cent; and Winners, 16 per cent.
The top eight gift categories for 2008 were:

  • Entertainment
  • Electronics
  • Toys
  • Gift certificates
  • Health, beauty and personal care products
  • Apparel
  • Candies and chocolates
  • Beer, wine and spirits

Overall, those likely to have cut down on holiday spending include: women shoppers, residents in Ontario and Atlantic Canada provinces, students and households with incomes less than $100,000.

The intention to pay for gifts with cash has increased since 2007 with 70 per cent (up six per cent from 64 per cent) of Canadians opting to pay upfront as opposed to buying on credit.

“In a slowing economy Canadians are tightening their wallets, by telling us they intend to pay for more purchases with cash,” said Robert Daniel, managing director of Maritz Research Canada. “Consumers recognize the need to be more careful about personal debt.”

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.