Posthaste: Incoming GST cut fails to dissuade Black Friday shoppers

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The temporary GST/HST cut will save Canadians anywhere from five per cent to 13 per cent on many everyday items depending on where they live, but it appears the discounts on Black Friday were too enticing for shoppers to wait.

The sales tax cut — which kicks in on Dec. 14 — will make most food tax free, as well as newspaper subscriptions, kids’ toys and clothes, and a host of other items, in an effort to help Canadians cope with the rising cost of living. The plan is projected to cost the federal government $2.7 billion.

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The announcement of the tax break had some, including Canadian Federation of Independent Business chief executive Dan Kelly, concerned that Canadians would bypass Black Friday and wait for the GST cut to make some purchases or would return items in hopes of rebuying them when the tax cut kicks in.

As it turns out, that may not have been the case, according to a new report from Moneris Solutions Corp., since week-over-week transaction volume increased 29 per cent during Black Friday, compared to 23 per cent last year. Overall, spending on Black Friday grew 11 per cent and transaction size increased seven per cent.

Cyber Monday, meanwhile, had a 13 per cent increase in transactions, compared to five per cent in 2023.

“There has been some concern that consumers would defer purchases due to the upcoming GST/HST tax break,” Peter Goldsztajn, vice-president of corporate data analytics at Moneris, said in a news release. “However, significant increases for Black Friday and Cyber Monday suggest that was not the case, with holiday sales being too good an opportunity to miss.”

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He said businesses can feel reassured that consumers generally did not defer purchases, but added that it will be interesting to see if spending increases once the break comes into effect.

“Ultimately, we will need to wait until all the data is available to get a proper understanding of the tax holiday’s impact on spending,” he said.

Broken down regionally, Black Friday spending only decreased in the territories compared to last year, while spending in Ontario climbed just two per cent.

There were spending hikes across the country on Cyber Monday, though sales in Manitoba, Saskatchewan and Ontario only increased between two per cent and three per cent.

“Economic factors like elevated inflation have been top of mind throughout the year, leading consumers to be increasingly cost-conscious,” Goldsztajn said. “As a result, bigger basket sizes suggest shoppers took greater advantage of sales.”

Black Friday shopping has almost become a national event, with 48 per cent of Canadians suggesting it’s the most important shopping event of the season, according to an October survey by the Retail Council of Canada.

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Still, some experts think the busiest shopping days are still to come. A recent survey by Interac Corp. predicted Dec. 20 will be the busiest shopping day of this holiday season, with an estimated 25.9 million transactions as shoppers look for last-minute items.

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Mondelez International Inc.’s potential takeover of chocolate maker Hershey Co. would be the biggest merger of the year.

It’s been a busy year for M&A as the industry slowly recovers from the COVID-19 pandemic, but the estimate US$44 billion would be tops.

The second largest deal is also in the food space, as Mars Inc. is planning a US$35.5 billion takeover of Kellanova, the makers of Eggos, Rice Krispies and Special K.

Read more here.

• 9:45 a.m.: The Bank of Canada makes its latest interest rate announcement in what is largely expected to be another cut.
• 10:30 a.m.: Bank of Canada Governor Tiff Macklem and senior deputy governor Carolyn Rogers hold a press conference
• Today’s Data: U.S. Consumer Price Index for November
• Earnings: Adobe Inc., Nordson Corp.

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Today’s Posthaste was written by Ben Cousins, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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