Holiday shopping is about expressing appreciation through a thoughtful, meaningful gift. But when prices of goods have increased 10.2 per cent over the last three years, consumers are rethinking their spending decisions on this year’s presents.
Although Canadians’ holiday spending is forecasted to increase by 10 per cent this year, this growth reflects higher prices instead of more purchases, as consumers have to shop more consciously with their budgets. Navigating high costs with marketing strategies and a renewed focus on emotional gift-giving, university students and businesses alike are preparing for Christmas in the wake of current economic circumstances.
On the down low
For students, holiday shopping this year may be more selective, given the already limited budget for most. First-year U of T student Gillian Boms has already given her shopping list some thought. Boms doesn’t have a job and plans on cutting down her expenses for Christmas by looking at more cost-effective alternatives for her loved ones.
“I have an idea of different [gifts] I can get for people,” Boms said in an interview with The Varsity. “I wouldn’t look at getting them something different entirely, but look at getting something more convenient price-wise. My dad loves coffee, so instead of coffee beans, I could get him a mug […] or something in the same region.”
Bom’s approach is reflective of broader trends. Accounting firm PricewaterhouseCoopers’ survey found that 77 per cent of shoppers plan to spend the same amount or less money on gifts this year compared to last year. Correspondingly, her budget for her dad’s gift this year is $30 instead of last year’s $50.
Like shoppers, businesses have also noticed the recent financial uncertainty. Peter and Paul’s Gifts — a gift basket store located in Vaughan, Ontario — has noticed smaller orders. “[Customers] are still ordering, but not at the higher price point,” said the store’s Chief Operations Officer, Katherine Eliopoulos in an interview with The Varsity. In addition to fewer sales of higher-priced items lately, the business has also experienced higher prices in item production.
Eliopoulos expresses the difficulty in balancing these higher production costs and lower sale prices, “we’ve really experienced the high inflation in shipping because we import a lot of our own [products].” Eliopoulos explains that they “really try and maintain the best price so long as our costs are covered… [and] people are still interested in ordering.” However, Peter and Paul’s Gifts have also adapted by appealing to a Gen-Z audience through their marketing strategies — such as using more social media platforms and showcasing their sustainability efforts, hoping to attract more customers despite economic difficulties.
Experiential gifts on the rise
Keeping low prices can attract more customers, but giving the impression that prices are being reduced is also effective. Tarun Dewan — a marketing professor at UTSC — describes holiday shopping as being tied to shoppers’ emotions, such as excitement for Christmas or nostalgia for family experiences. “Encouraging holiday season shopping is less about price… and much more about how emotional it can be, about how many emotions things can be connected to.”
Research in marketing has also shown that prices typically go up in December since major promotions and deals like Black Friday or Cyber Monday give shoppers the impression of reduced costs and saving more money. Therefore, marketers should capitalize on these emotional aspects and take the opportunity to adapt to production by “[increasing] their prices just that tiny little bit” — as sales would not be impacted as much, as Professor Dewan suggested.
Beyond budgeting, shoppers are notably placing more value on experiential rather than material gifts — a preference shaped by both economic and emotional considerations. In Bom’s case, “going back to California for reading week [was] one of my Christmas gifts,” she explains. For Christmas, her family usually tries to do “a family experience as [their] big gift, and then smaller presents.”
Cindy Chan — a U of T marketing program assistant professor researching the role of gift-giving in shaping relationships — explains the benefits of experiential gifts. “We find that experiential gifts are more effective at strengthening relationships between recipients and their gift-giver, and even when gifts are equally well-liked,” Chan notes. “Going to a sports game, to a concert, or to a spa… tend to be more emotionally evocative types of experiences.” This type of present is typically more emotionally connecting and a thoughtful alternative for budget-conscious shoppers.
Professor Chan suggests that gift cards to movie theatres or performances can eliminate the social risk of giving presents to people they are not friends with. She suggests that holiday shoppers interested in experiential gifts will boost the sales of industries such as travel, entertainment, and hospitality. Likewise, Canadians are forecasted to spend 21 per cent more on travel and 20 per cent more on entertainment this holiday season than last year for Christmas. It seems that this year, consumers are more likely to consider experiential gifts than they were during previous holiday seasons.
As the holidays approach, consumers and businesses alike are adjusting to higher prices through different gift-giving approaches and marketing strategies. However, it is important to remember that a lower budget does not mean a less meaningful gift. According to Professor Chan, “gift-givers tend to think that they need to spend a lot on gifts, that there’s a positive correlation between how much you spend and how much the gift will be appreciated. But recipients don’t show this strong correlation.” In other words, gifts are still thoughtful regardless of their monetary value.
At the end of the day, the spirit of giving gifts during Christmas is not about the money you spend but the meaning behind the gesture.
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