Canadians adopt ‘sensible spending’ attitude that includes dining out

June 16, 2015, London, U.K. – Canadian age 35 and under place a high priority on short-term rewards and are as likely to put extra dollars towards paying off debt as they are to dine out, says a report on Canadian spending from Mintel.

Spending is expected to continue to rise, surpassing the $1 trillion mark reached for the first time in 2013 and is estimated to reach $1.084 trillion with expenditure increasing by 4.7 per cent over the next five years, says “Canadian Lifestyles 2015,” research firm Mintel’s recent look at Canadian consumer markets. 

Food-related categories like dining out and groceries are key areas of interest for consumer spending, said the company in a news release. In fact, one third of consumers perceive increased spend on groceries in 2014 compared to previous years. Out-of-home pleasure-related expenditures and out-of-home alcoholic drinks are predicted to see slowed growth. The recently released report offers an overview of the categories where consumers are forecasted to spend in 2015 and beyond.

From a demographic standpoint, the Canadian population is aging, with seniors as the fastest-growing age group in the country, and immigration rates continue to climb with one in five people in Canada being foreign-born. While the economy continues to grow, uncertain times lie ahead as the recent drop in oil prices weighs heavily, causing near-term growth to slow. Moreover, record-high levels of household debt against recently lowered interest rates have led to a drop in consumer confidence. Despite the country’s employment rate remaining steady over the past five years, with the per centage of unemployed Canadians falling to a post-recession low in January 2015, Mintel reports that consumers are likely to be more conservative in their spending this year, making cutbacks in order to prioritize paying off debt. However, sensible splurges are still a priority for Canadian consumers.

“While the drop in oil prices was expected to give consumers extra cash for spending, the record-high level of household debt is top of mind among Canadian consumers leading them to adopt a slightly more conservative approach to spending, focusing on paying off debts and making cutbacks,” said Carol Wong-Li, Mintel’s senior lifestyle and leisure analyst, in the release. “There is a glimmer of hope, however, with consumers still looking to treat themselves to long- and short-term rewards, creating a mood of sensible spending for 2015. We’re predicting food-related categories like dining out and groceries will experience reasonable growth this year.”

Canadian consumer spending is estimated to reach $1.084 trillion with expenditure increasing by 4.7 per cent over the next five years

Long-term goals rewarded by short-term treats

Although consumers express keen focus on cutting back their spending, Mintel data shows the reality is that they will continue to make purchases across all categories including non-essentials. In fact, the areas where Canadians are choosing to allocate discretionary dollars points to a desire for striking a balance between financial priorities and reasonable indulgences, specifically, dining out (31 per cent) and long vacations (31 per cent). In their quest to find an equilibrium, Canadians are also focusing on family relationships, personal well-being and taking steps towards adopting a healthier lifestyle in 2015.

Furthermore, Canadian priorities in the categories they choose to spend their ‘extra’ money highlights an interest in balancing long-term goals with short- and long-term rewards. These include paying off debt (34 per cent), dining out (31 per cent) and small “extras” for family members (24 per cent) among the top five categories. Where their discretionary funds are spent largely depends on the consumer’s life-stage. Canadian millennials (those age 35 and under) place a high priority on short-term rewards and are just as likely to put extra dollars towards paying off debt (32 per cent) as they are dining out (34 per cent). Middle-aged consumers, particularly 35-44s, plan for the future and are more likely to cite paying off debt as a priority than other age groups (45 per cent versus 34 per cent overall). Older consumers (over-55s) are likely to be retired or planning for retirement, and therefore more inclined to put extra money towards a long vacations than average (39 per cent vs 31 per cent overall).

However, two of Canada’s growing consumer segments deviate from the top three priorities. Chinese Canadians are more likely to prioritize investments (37 per cent versus 23 per cent overall) and cite better work/life balance as a personal goal (51 per cent), while those who identify as LGBT are more likely to prioritize entertainment (31 per cent vs 22 per cent overall) and put a low priority on items that require additional saving time including investments (14 per cent versus 23 per cent overall).

A quest to find balance

This year is about finding life balance for Canadian consumers. Over three quarters of consumers plan to be more attentive to family relationships, financial/work priorities and personal well-being in 2015.

“It is likely that Canadians are trying to be realistic with their approach to personal goals this year. While there is a high level of interest achieving financial and personal goals, Canadians are much less inclined to cite that they ‘will definitely do it’ compared to those who ‘would like to, but may not manage it’,” says Wong-Li. “The goals that see the highest commitments are spending more time with family, getting household finances in order and having a better work/life balance. Women demonstrate a greater focus on family and physical appearance, while younger Canadians prioritizing self-enrichment more so than the average consumer.”

In their quest to find balance, Canadians aim to adopt a healthy lifestyle. The top two goals are exercising regularly (64 per cent) and eating more fruits and vegetables (59 per cent). These priorities are aligned with current behaviours as most are already engaged in these activities and habits on a weekly basis. Furthermore, losing weight and getting more sleep are goals for nearly half of all Canadians (49 per cent and 47 per cent respectively). This may lead some to be more optimistic in their health and wellness goals, though most seem to be approaching the year with realistic expectations, citing a range of up to six health and wellness goals for the year (58 per cent).

Canadian women are taking a more active approach to health and wellness this year as men are targeting fewer goals than women with 31 per cent of men cited targeting between one and three goals (vs 19 per cent women), compared to 44 per cent of women who are targeting seven or more goals (compared to 31 per cent of men). In tandem, women are more likely to target virtually all health and wellness goals compared to men. However, focus differs by age with older women looking to become more active (56 per cent), while younger women focus on cooking more at home (43 per cent). Demographic differences are also seen by region and among segments, as Quebecers under-index on virtually all health/wellness goals, while Chinese Canadians prioritize sleep (59 per cent vs 47 per cent overall) and vitamins (40 per cent vs 33 per cent overall).

Perceived cutbacks on non-essentials

Canadians generally perceive similar levels of spending across categories in 2014 compared to previous years. Perceived cutbacks center on non-essential and pleasure-related social items, including out-of-home alcohol (35 per cent), leisure/entertainment (32 per cent) and dining out (33 per cent). This points to consumers bringing the focus back into the home with increased spending on in-home food (31 per cent). The perceived reduction in spend is highly influenced by consumers age 45 and over who are more likely to report declined spend across most categories, particularly dining out (38 per cent spending less vs 10 per cent spending more), leisure and entertainment (34 per cent spending less vs 6 per cent spending more), and clothing/accessories/footwear categories (29 per cent vs 8 per cent spending more).

Although Canadians cite spending less across most categories, consumers also acknowledge that they will still have expenditures towards nonessential items. To this end, differences are seen among demographics with regards to reporting greater spend in certain areas. For example, millennials spent more across most categories, parents spent more on household care and Chinese Canadians spent more on eating out and technology.

2014 expenditure overview

In 2014, Canadian consumer spending continued to rise, surpassing the C$1 trillion mark for the first time in 2013 and is estimated to have reached C$1.084 trillion in 2014 with expenditures increasing by 4.7 per cent over 2013 totals. Essential goods and services such as housing, transportation and personal finance account for three of the four largest categories. Canadian Lifestyles 2015 offers an overview of consumer spending in 2014:

•          Expenditures on housing represent the largest category and account for about 25 per cent of all Canadian consumer expenditures in 2014. Demographic shifts, including increased immigration and an aging population, have positively impacted the market.

•          Expenditures on transportation increased 6.8 per cent between 2013 and 2014 and represented the second largest category in Canadian expenditures. Retail sales were driven by motor vehicles purchases and fluctuating gasoline prices.

•          The third-largest category, personal finance expenditures, increased 4.8 per cent 2013-14. Positive employment growth led to healthy ownership rates of savings, investments, insurance and lending products.

Consumer spending in 2015 and beyond

Reflecting a similar trend to spending in recent years, total Canadian consumer expenditure is forecast to grow by 4.7 per cent over the next five years and will likely exceed C$1.2 trillion in 2019. Over the next five years, food-related categories like dining out and groceries are expected to rise at a similar rate to overall growth. Canadian Lifestyles 2015 offers an overview of a few of the categories where consumer are forecast to spend in 2015 and beyond:

•          Essential categories such as transportation and housing will see the greatest gains, food-related categories like dining out are also predicted to rise at a similar rate to overall growth. Canadians are highly engaged with the category with 88 per cent ordering takeout/delivery and 87 per cent dining in at restaurants monthly.

•          Out-of-home pleasure-related expenditures, leisure and entertainment and out-of-home alcoholic drinks saw the least gains year over year. At seven per cent, a relatively minor share of Canadian adults state that they spent more on alcoholic beverages on-site in the past year compared with prior years, while a far greater share (35 per cent) say that are spending less.