The profile of the Canadian consumer is shifting. Beliefs, behaviours and feelings around money are changing. Canadians are pivoting their priorities and revisiting their budgets to balance savings and expenses – in the face of inflation and higher interest rates.
In this episode of the Smart Advice Podcast, we delve into the financial factors and emerging trends shaping the lives of Canadians today. Joined by Andrew Grenville, Executive Vice President of Research at Angus Reid, we explore a range of topics, from the significant impact of rising living costs, to the evolving spending habits that prioritize savings over brand loyalty.
We also discuss the varied financial goals of Canadians, including retirement and travel, and the shifts in consumer behavior that are redefining the Canadian economic landscape. This insightful conversation sheds light on the challenges and hopes that define the financial realities for many today.
Tune in to gain valuable perspectives that could help you balance Canadian living costs against your financial goals.
Andrew Grenville is a seasoned market researcher with over three decades of experience in the industry. As the Executive Vice President of Research at Angus Reid, one of Canada's leading public opinion research firms, he has spearheaded numerous studies that delve into the behaviors, beliefs, and economic conditions affecting Canadians.
Andrew is also an accomplished author, having published significant works in the field of market research, including books like "Eureka: The Science and Art of Insights" and "The Insights Revolution: Questioning Everything." His expertise and insights have been instrumental in shaping understanding of consumer trends and economic challenges across Canada.
Read more about Andrew on the Angus Reid website, or connect with him through LinkedIn.
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Carissa Lucreziano: Welcome to Smart Advice, a podcast connecting you with real financial advice, investment strategies and economic trends, empowering you with insights you need to make smart decisions about your money. I am CIBC’s financial advice expert, Carissa Lucreziano.
Today we're going to explore the changing dynamic of the Canadian consumer. As a consumer yourself, you're probably very much in tune with the evolution of your spending behaviours over the past few years. And you're not alone. We've all probably seen a funny meme of the painful experience of a trip to the grocery store in this new norm of inflationary strain on our wallets. The reality has sunk in for most of us — we're paying more for the same or what feels like less, and we have less disposable income to find our discretionary and essential needs.
So it's no surprise that many Canadians are pivoting their priorities and assessing their budgets to balance savings and expenses. But there's a lot more going on beneath the surface with Canadians beliefs, behaviours and feelings around money.
In this episode, we are going to take a closer look at what has actually changed and how the mindset of the Canadian consumer is shifting. And we are going to do this with the help of insights from Angus Reid, a public opinion research firm that has been at the forefront of innovation in market research since the 1980s.
Exclusively for this episode, Angus Reid conducted a survey of just over 1500 Canadians from around the country to find out how they're feeling about their finances today, their thoughts about their financial future and the economy at large.
With me today is the man behind the research, Andrew Grenville, who is the Executive Vice President of Research at Angus Reid. Andrew has three decades of industry experience and has conducted a lot of research on research, as he calls it, publishing numerous journals and articles. He is the author of Eureka: The Science and Art of Insights and The Insights Revolution: Questioning Everything.
Andrew, welcome to the Smart Advice podcast.
Andrew GrenvilleThank you very much. I'm really looking forward to this discussion today.
Carissa: Yeah, I have been looking forward to this discussion. These topics are so relevant, and I'm sure you would agree that every Canadian family and friends circle are talking about these issues that we're facing.
Andrew: Oh, yeah. You sit down with people and they'll be like, Did you see the price of that watermelon? Yes, it's crazy out there.
Carissa: Yes. And this weekend? Funny enough, I said the same thing. 14.99, incredible. We'll talk more about that. So a big thank you. I know in preparation for this episode, you and your team took a temperature check on how Canadians are feeling about their financial well being. We're going to talk more about these findings.
There's a couple of things in this survey that stood out to me, for instance, almost 70% of Canadians are concerned about their financial future, like I've seen this number it keeps on going the wrong way, quite frankly, and only 20% feel that they're gonna have enough saved to maintain a standard of living for a desired retirement.
So is this general sentiment across the board? And when you peel back the onion, does it differ? You know, where you live in Canada or your age, for example?
Andrew: This sense of concern really blankets all of Canada. We do see a little variation from region to region, maybe in Quebec, people are a little more optimistic. And the Atlantic region, they might be a little more pessimistic. But there aren't big differences. This is something that cuts through everyone, what we're finding is that inflation is really having an effect on people. In the study, we found that three quarters are spending more on their living expenses. And that six to ten are spending more on their housing as a result of this inflation. That's a big shift.
And as a result, just over half are spending less on fun things and entertainment. About half are also saving less. We're also seeing that now people are forced to budget — see that seven to ten are saying, “I'm budgeting now, more than I used to.” And that's something that's not just for young people, and not just for those who are less well off. Even among those households that are earning 100k plus a year, we're seeing seven out of ten saying that they're budgeting more now.
So this situation has come about because of this inflation and this inflation creates a sense of uncertainty and a lack of control. That makes people nervous. That means some rein in their spending or it pushes them towards the edge of not being able to pay the bills. We see that basically half of all Canadians save, that they, at the end of the month, don't have any money left over. We see another half — the same half — saying they don't have three months worth of savings for an emergency, or any unexpected expenses.
So there's a lot of Canadians that are living close to the line. And then when you throw in the increases in things like food that you have to purchase, it causes some fairly significant fears to kind of reverberate through the landscape, this uncertainty just unsettles people; we find that eight out of ten say you can make all the plans you want. But life has a way of abandoning everything.
Carissa: You know, I hear you. And it's interesting. I mean, it's always good to do a budget, but in the environment of, you know, feeling strained or anxiety around it really isn't. There are certain things absolutely that's within our control around budgeting. But to your point, things like essentials, groceries and things that you need to purchase such as essentials for your family, that's not within our control things like interest rates. So there's a lot of pressure. Absolutely.
Andrew: Yeah, I think we've also gone through a pandemic, which really did shake people. It proved that the unthinkable can happen. And so I think people are still on edge about that. I know, we don't like to use the P word anymore to talk about that, because we all want it to be in the rear window, but it does hang over our society and temper our expectations.
Carissa: You know, Andrew, as we've chatted just early on in this discussion, Canadian households are definitely feeling the financial pinch. However, there's positive signs of optimism. I know your research found that a bit more than half feel that over the long term Canada is going to flourish and prosper. You know, this is good. I think everyone is waiting for some reprieve. But the big question is when? And how long? Like how long is this long term to Canadians?
Andrew: I think it really depends on your age at the moment. People that are older, that are retired, say already. For them, their long term is shorter than somebody who's in their early 20s. So I don't think we can know. But what's interesting about that stat is the 54%, who do say that there will be hope long term, it kind of varies a bit by age. And it's the youngest, and the older, that are a little more optimistic looking forward.
It’s the people that are in the middle, where it's a little less prevalent, that hope. That's not really unusual. It's kind of expected when you ask questions about happiness, or life satisfaction, you see that the people in their kind of middle ages are under more pressure, and are less satisfied and less generally happy. I'm glad to report that I just turned 60. And so I'm on the side where things are bound to get a little happier.
But you know, we do see hope for the future long term. But there is also a very real concern that things are not always going to be great. So we asked the question, “Would you agree or disagree that children today will grow up to live in a Canada that is much diminished?”
And we actually have three quarters of all people agreeing with that, which is a sad and sobering statistic. And that perception doesn't really vary by age or income. And it's this uncertainty, I think, in times of uncertainty, people are more inclined towards fear than optimism. And evolutionarily speaking, that's actually not a bad strategy. It's better to be prepared for the worst than to bank on the really good things happening. So you're just more likely to survive that way. So it is a survival mechanism that we embrace that fear in the face of uncertainty. But I do think that long term that there is hope, then people should be quietly optimistic.
Carissa: Yeah, and I think you said it earlier. It's just it's the amount of time it just feels like a long time that there's been the, you know, the situation and the pressure, and that does put a strain on people. And it's put a strain on Canadians. Like at CIBC, we put out an annual financial priorities poll. We found that saving and investing remains on the top of the priority list for 2024, which is really positive, because this means that Canadians are continuing to prioritise financial goals to fund their future and ongoing expenses. What are you hearing about Canadians’ ability to do both of these things? Because depending on goals, they can be very different.
Andrew: Absolutely. We find that the country is split on this issue of saving and investing. Some people can do it and are really determined, and other people simply can't. And so we've found that half of all Canadians can't afford to save for a rainy day. We also found that another half say, “Nothing will get in the way of me achieving my financial goals and dreams.”
So there are people who don't have, as I mentioned earlier, anything left at the end of the month. And so that puts them in a very difficult situation when it comes to trying to, to save, let alone invest.
Carissa: And what percentage of people from your research and experience are maybe in the middle that with the right advice and help could at least start to look at, you know, saving for the future?
Andrew: Yes, I think that, especially once we get past this worst of the inflation that people do really want to save, you know, we found that six out of ten say, I feel good about the savings and investments I put aside, or I'm putting it aside for the future. So people have this desire, it's just whether they have the ability at the moment, once they've paid for those very expensive groceries.
Carissa: Yeah, exactly. And that's why budgeting is important. Like, you know, it doesn't have to be all or nothing. But there's certain times and maybe this is one where priorities have to shift, but the advice and the focus on, you know, those everyday expenses and seeing where you can make it work. That's an ongoing process that you want to make sure you engage with.
Andrew: Absolutely, yep, all the little steps matter.
Carissa: 100%. 100%. How Canadians spend their money is important fuel to the engine of the economy. We all know that a CIBC report uncovered that consumer spending is below pre-pandemic levels. Some of the reasons for that, and the main ones for this decline is that households are becoming more intentional with their purchases — you said it early, more and more people are budgeting. And so they're allocating to savings, more than discretionary spendings where they can.
And this tightening has had an impact on our spending behaviour and made us in tune with where we are actually spending our hard earned money. Something very interesting for your insights was feeling towards brand loyalty. You know, this is an interesting topic, because we all have brands that we love. But you know, will we sacrifice that connection to save? Your insights stated that almost 90% agreed — they're happy to switch brands to save money. And even if it's just for a few dollars, is this new for the Canadian culture mindset?
Andrew: It's really part of a larger global change. It's very much a big change in Canada, people are much more, as you say, intentional about their spending, which is good. What we've seen is McKinsey, the consultancy, has done some worldwide work around this brand switching, willingness to try new brands.
It was first kicked off as a trend, really, by the pandemic where people were often forced to try other brands. And so they did. And guess what the world didn't end when they bought didn't buy the exact same brand, as they always did. That opens the door then, to say, “Well, okay, maybe I could save a few dollars if I bought this instead of that.”
This is a fairly significant change, where a lot of companies could count on people buying the same thing over and over again, now people are stopping, thinking and choosing accordingly.
Carissa: But hopefully that translates to some further discounts along the way and looking at the way companies compete. But I think in this environment, you're absolutely right, people are thinking about, “If I can save X amount of dollars, and it's relative, why don't I at least try it out?” That's really interesting. So you mentioned that Canadians are facing challenges when it comes to prioritising their spending, how is this affecting, you know, how they spend their money?
Andrew: Well, as I mentioned, half are spending less on fun, half are saving less, people are looking for the cheaper brand. It really is about being able to pay the bills. Like I said, a lot of people at the end of the month, you know, barely have enough to pay all those bills. About half of the people struggle with that. And I was talking to the CEO of The Daily Bread Food Bank the other day, and he was talking about how there's just been this insane, almost 10 times growth in the amount of people coming to the food bank, because they can't make ends meet.
So these are very real challenges for a lot of people. And as you mentioned, you know, if people don't spend, that hurts the economy and so there can be this downward spiral. In light of that, something like saving a few dollars to buy a different brand makes a whole lot of sense as a strategy for trying to keep your head above water and hopefully put some aside for saving.
Carissa: Yeah, it all adds up in the grand scheme of things. So looking at balancing it all. So managing your monthly expenses, you know, paying down debt, travelling and investing for the future. As Canadians, we're juggling a lot, you know, short term and then really trying to think about those long term goals. Do we know what Canadians are saving for? What are their top financial priorities?
Andrew: Yeah, so retirement is a big thing that people are saving for. Whether you're asking them about their short term or their long term goals, that's certainly on their mind. But as a sign of hope, for both short and long term, people are very interested in travel. So we have about 40% of people saying travel is one of their either short or long term goals. And I think that speaks to the experiential, it speaks to having fun, it speaks to being in the moment. So it's a little ray of sunshine, or maybe it's just a chance for hope for people. It's good to see.
Now, buying a home was obviously another goal that's fairly common, but it's really life stage dependent. So you've got people who already have homes, people who can't yet afford to pull together a down payment, those kinds of things. But it's also goals for people, for about three out of ten Canadians, it's things like paying off credit card debt, or paying off the mortgage that are really goals.
Carissa: Yeah, and interesting. I was on your website, and I was looking at, like the top issues in Canada, and I was, so it was nice to see it in a way that travel was a big one, and no one wants to give it up. It was really a top priority for Canadians. We've seen that too, several years in a row, like to your point, you're not going to prioritise that over essential expenses.
But those goals, and the goals of saving for retirement over the short term and long term that came out in your studies is, is really optimistic that Canadians know that it's very important to save for the long term. And they'll continue to focus on achieving that goal.
Andrew: And I think it's also interesting to note that we've seen in lots of other research, that when you talk about retirement, that travel kind of goes hand in hand that mentally people want to see those things.
Carissa: Yeah, it's about the experience. So this is a really good indication for the future, but how confident are Canadians that they will achieve their financial goals?
Andrew: Well, it really depends. Back to the half that are doing well and the half that are struggling a bit. We ask people whether they agreed or disagreed with the statement, “I have no doubt I will be able to achieve my financial goals.”
55% of Canadians agree with that. So Is the glass half full, half empty? I guess it depends where you sit. By age, if we look at the younger group 18 to 34, 47%, say they have no doubt. So a lot of them with doubt, still lots of life left to live. It's 51% amongst those that are 34 to 54. And then when you go 55 plus it gets up to 63%. But that also includes a fair number of people who are already retired, and who are pretty confident that they're sitting on a nest egg that will see them through. That said, there are about 40% of people that are retired that worry that they don't have enough to make it.
Carissa: So you mentioned about retirement. Is it a big worry for some in not having enough for day to day living expenses or to sustain an enjoyable retirement? Because as you mentioned before, retirement now and for a while now is being tied to experiences like travel and other things that you know, somebody would want to experience.
Andrew: You know, so this is an interesting one. And we asked people whether they again agree with this statement, “My standard of living is going to take a big hit when I retire.” 61% of people agree with that.
So there's an expectation, not that they're necessarily going to be destitute, but that they've had a change in what's possible for them to buy and to do. That's a pretty high number that had that kind of fear. We also found that six out of ten say they’re going to have to work longer than I'd hoped, putting it off because they fear that there just won't be enough to maintain what they've been used to doing.
Carissa: Yeah, absolutely. And I think the last several years have really put into perspective for many and those that are retiring or reassessing. And you know, everybody should. Expenses changed, what you've planned for maybe five years ago, is going to cost you more today. So the opportunity to look and say what is top priority? What are some of the things that maybe are not a big deal, but what are the absolute things that I want to continue to strive for, into retirement?
So, great discussion, a lot of great insights here. I could chat for hours on this. I find it fascinating. You and your team have done tons of research on this topic. And we'll continue to do so. Of everything that you've seen, where do you think we're headed in the evolution of consumer behaviour in Canada?
Andrew: I think this aura of uncertainty is going to take some time to fade. I think we'll continue to see less brand loyalty and a more pick-and-choose approach, a purposeful approach to purchasing. I think we'll also see a continued focus on experiences over possessions. So things like travel will continue to be a priority for those that can afford it.
But unless we see a real change, something happens, AI makes all the difference in the world or something the changes the economy, I think we will see a continuation of divide within society of those who are doing just fine and are going to be fine and those who are living closer to the edge, and that that's a difficult place to be. But I think we can all hope that we can see this economy turned around.
Carissa: Yeah, absolutely. So Andrew, thank you for joining me today sharing your perspective, a lot of great insights on the evolution of the Canadian consumer, more to come for sure. Thank you again.
Andrew: Thank you.
Carissa: If you would like advice mapping out the approach to reach your financial goals, we are here to help. Our team of advisers will work with you on managing your finances, debt portfolio, structuring and consolidation, investment strategies, any questions you have on retirement and estate planning, and we'll connect you with additional specialists along the way.
Like market changes, personal circumstances and goals are always evolving. Having a clearer perspective can help you stay focused and motivated, especially during times of financial uncertainty. Thank you for tuning into this episode of Smart Advice. I'm Carissa Lucreziano, and if you enjoyed this episode, share it with someone in your circle. To make sure you never miss an episode, follow Smart Advice on your favourite podcast platform. For more financial tips, visit cibc.com/smartadvice.