People look through the window of a store on Boxing Day in Montreal on December 26, 2021. Stores in Canada are gearing up for Boxing Day sales, with many rolling out deals early in the hopes of enticing budget-conscious shoppers. The Canadian promotional retail event has been overshadowed in recent years by its American counterpart, Black Friday. But experts say Black Friday and Cyber Monday sales late last month fell short of expectations, leaving some stores with inventory to clear before the end of the season.

Image Credit: THE CANADIAN PRESS/Graham Hughes

Stores in Canada are gearing up for Boxing Day sales, with some rolling out deals early in the hopes of enticing budget-conscious shoppers.

The Canadian promotional retail event has been overshadowed in recent years by its American counterpart, Black Friday.

But experts say Black Friday and Cyber Monday sales fell short of expectations last month, leaving some stores with inventory to clear before the end of the season.

"Black Friday is the most important day of the year for retailers and it was a bit of a bust," said Lisa Hutcheson, managing partner at retail consulting firm J.C. Williams Group.

"We're going to end up seeing some deep discounts around Boxing Day because it's been a bit of a slower sales season. It hasn't been those crushing crowds of December that we've seen in the past."

Even with big discounts, consumers might be hesitant to open their wallets, she said.

"Inflation is really playing a big role, there's a lot of fear," Hutcheson said. "Boxing Day is typically for gift card redemption and personal shopping and if people are concerned about finances, there will be less personal shopping taking place."

Stores will try to strike a balance between the need to sell surplus stock with maintaining their margins, retail analyst Bruce Winder said.

The bigger the discount, the more volume of goods a store is likely to sell. Smaller discounts keep margins higher but run the risk of stores carrying excess merchandise that needs to be packed away in January, he said.

"In some cases you can pack away the inventory until next year but that takes labour dollars and you've still got to pay your suppliers for it," Winder said. "It's a drain on your working capital."

Yet Retail Council of Canada national spokeswoman Michelle Wasylyshen said most retailers are not overly concerned with inventory levels — at least to the degree some analysts suggest.

The message that stores have too much stock may be partly to blame for lacklustre Black Friday and Cyber Monday sales, which she called "uneven at best."

"The general feeling is that consumers were waiting for better deals, either because they have heard in the media that retailers have too much inventory, or because they have had to tighten their belts from the higher costs of living," Wasylyshen said.

Still, stores are heading into Boxing Day and the year-end retail sales period with "cautious optimism," she said.

"The Boxing Day event is a welcomed opportunity for retailers to pre-plan promotional events and look at their inventory levels to see if in-store or online sales events are required to help eliminate excess inventory," Wasylyshen said.

Much like Black Friday, Boxing Day has become a week-long event, with fewer in-person doorcrasher sales that once epitomized the sales day.

"The tendency of retailers now is to extend these events so that people don't have to all come in on one day," said David Soberman, marketing professor in the Rotman School of Management at the University of Toronto.

"That's an especially important thing now given the fact that the flu, RSV and COVID-19 are still very, very active and people are worried about that."

In terms of the depth of discounts, Soberman said the deals will likely be "sporadic" with goods that are considered more discretionary seeing more promotional activity.

"Where retailers have high stocks, you may see some pretty good deals," he said. "The last thing you want to do is carry Christmas and winter stock through the first quarter."

Retailers looking for an edge on the competition will focus on customer service and rewarding loyalty, according to recent research.

A poll by retail payment service Adyen conducted by Angus Reid found more than half of survey respondents aged 18 to 34 cited loyalty to stores they’ve shopped at before as the biggest driver in deciding where to shop.

"The most important factor is whether it's a brand they're already familiar with and have a relationship with," said Sander Meijers, Adyen’s country manager for Canada.

"They really want to be recognized when they buy something online or in store and get rewarded for being a loyal customer."

The survey also found that service, including the speed of the checkout process, was key for many Canadians when deciding where to shop during holiday sales.

"The speed and seamlessness of a checkout experience is always a key indicator of whether a retail store is going to be successful or not during an event like Boxing Day," he said.

The online survey of more than 1,500 Canadians was conducted in early November. The polling industry's professional body, the Canadian Research Insights Council, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

This report by The Canadian Press was first published Dec. 22, 2022.

News from © The Canadian Press, 2022