(Click to enlarge)
Consumer spending in Canada grew by 5.49% in the fourth quarter of 2015 on a year over year basis, driven largely by the low loonie, according to a new report by credit and debit payment processor Moneris Solutions.
The latest MonerisMetrics report, which analyzes credit and debit transaction data, shows growth in the final three months of 2015 was consistent with the increases seen in the first three quarters of the year—5.78%, 6.08% and 6.68% respectively.
With the exception of Alberta, all provinces posted increases during the quarter. New Brunswick posted the strongest increase (8.76%), followed by Ontario (8.33%). Saskatchewan posted the smallest increase (1.35%).
“In 2014, we had three quarters of flat growth and then we had a bit of growth in the last quarter,” said Rob Cameron, chief product and marketing officer at Moneris Solutions. “In 2015, generally spending was up about 5% year over year, so we saw strong results all year and the fourth quarter continued the trend.”
Cameron said two factors contributed to the gains: consumer confidence and the low dollar. “We know that Canadians were spending more of their dollars at home and we also saw really strong results in terms of our low dollar bringing tourists, in particular across the border, to shop.”
Dollars spent on foreign credit cards at Canadian merchants increased by more than double the overall rate of growth over the fourth quarter of 2014. U.S. credit cards accounted for the highest foreign dollar volumes, followed by cards from China and the U.K.
Holiday shopping events in Canada were a big draw for tourists. Spending on all foreign credit cards was up 27.73% year over year on Black Friday, and 23.7% during Boxing Week.
Black Friday continued to gain momentum in Canada overall, with consumer spending up 9.58% over 2014. Boxing Week (December 26-31) saw an increase of 7.54%.
WINNERS AND LOSERS
Looking at specific categories, restaurants and specialty stores saw the biggest spending increases in the fourth quarter.
Spending on restaurants increased by 7.27% overall and fast food restaurants led the way with a 12.81% increase. Bars and pubs increased by 5.04%, followed by dine-in restaurants at 4.84%.
Spending at specialty retail stores was up 6.34% overall, and within the category, the biggest gains were in pet shops (9.72%), women’s accessories (8.53%) and stationery stores (6.75%). Home electronics saw a 6.54% increase for the quarter overall, with an 11.74% increase on Black Friday.
While apparel sales were up by only 3.44% overall, women’s clothing saw a significant increase of 8.19%. Spending on men’s apparel increased by only 1.83%.
Gas stations and retailers dependent on snow were the biggest losers of the fourth quarter of 2015. Spending on gas and convenience was down 5.9%, spending at sporting goods stores was down 2.1% and spending at shoe stores was down 1.7%.
The decline at gas stations is attributed to lower gas prices, but for sporting goods stores and shoe stores, it’s all down to the mild winter weather.
“People aren’t going out and buying new winter boots, they’re not buying that new winter jacket. We know that spending in any of the winter sports like skiing is way off year over year,” said Cameron. “Certain categories that were dependent on a bit of snow to inspire shopping did suffer, even though spending was up overall.”
TAP TAKES OFF
The report also found Canadians are embracing tap technology at the checkout. Contactless payments accounted for 5.8% of all transactions – more than double their share from the same period last year. Contactless payments are continuing to see triple digit growth, increasing by 133.44% over the fourth quarter of 2014.
“We like to say that we’ve hit the tipping point on tap payments, where all of a sudden it hit mainstream,” said Cameron. Part of the reason is the number of merchants that can handle tap payments has hit critical mass.
“Virtually all the terminals we’ve put out are tap enabled. We’ve made a big investment over the last few years in getting the infrastructure out there,” said Cameron. “For consumers, it’s easy and it’s something they can get used to, so they’ve really embraced it.”
(Note: The percentages cited in the MonerisMetrics report are derived from actual sales volumes — the dollar values of credit and debit card transactions being processed by Moneris merchants — compared with sales volumes from the prior year.)
