A new global survey by Salesforce of 5,000 consumers across Canada, Australia, the US, the UK, and Singapore reveals critical changes to consumer spending amid inflation and economic uncertainty.
Key Canadian results include:
- Nearly 60 per cent of Canadian consumers say sharing relevant personal information is valuable for an instantly personalized experience with a Retail & Consumer Goods business;
- Nearly half of Canadian consumers expect a better experience from retailers as a result of the current economic conditions;
- 76 per cent of Canadian consumers will remain loyal to companies this next year if they provide better data security; and
- 78 per cent of Canadian consumers plan to reassess their retail spending over the next 12 months.
Key global results include:
- Having a disconnected experience is consumers’ #1 frustration when dealing with organizations;
- Consumers are more likely to break up with a brand over poor quality service than high prices; and
- Nearly 60 per cent of consumers say communications or offers from a company should have the most-up-to-date information within hours.
Caila Schwartz, Director of Consumer Insights and Strategy for Retail and Consumer Goods for Salesforce, a global leader in Customer Relationship Management, said overall the survey showed that value is incredibly important today for consumers and has driven much of decision making when it comes to spend.
“We saw that across the board from a global level and down through the regions. In particular, we saw discounting strategy really driving demand. What we ended up seeing is retailers holding on to discounts,” she said.
“Over the last couple of years we had really strong demand and really low inventory. So it drove down discounting overall. This year was a little bit different. We didn’t have the same inventory challenges and demand wasn’t as strong. So what we thought we would see is retailers leaning into a very commercial season which is overall what we did end up seeing but when and how they discounted was quite different.
“We anticipated what we had been seeing over the last several years – I want to say maybe even since 2017 or 2016 – was an increase in discounting in those early November weeks . . . That is not what we saw this year. It was very quiet in the first couple of weeks of November and discounting was not as aggressive as it had been in the past in those early weeks. And it wasn’t until Cyber Week when we actually saw promotions kick in. And ultimately that really drove demand. Consumers saw that discounting was really low and they didn’t take the bait. They held back on purchases. And so those early weeks of November, leading up to Cyber Week, we actually saw quite significant declines in online sales and a lot of spend really got pulled back into that Cyber Week period. That’s when we saw the discounts start to rise. That was really driven I think by retailers looking to hold onto margins as much as they could.”
Schwartz said that even before the holiday period starting around the early summer of 2022 more and more consumers were saying that they were only going to buy products that were on sale.
“That was true across all generations, across all income levels. More and more consumers as the year rolled on were becoming price conscious and that ultimately is what ended up shaping what we saw play out,” she said.
“Discretionary spending is definitely down and there’s a focus more on necessities versus those nice to have type goods.”
The global survey found that 81 per cent of consumers say they will reassess their budget over the next 12 months as they seek more personalized experiences. Also, 52 per cent of consumers say poor quality service is the primary reason they won’t make a repeat purchase. And over 60 per cent expect companies to react instantly with up-to-date information when transferred between departments.
It said retail, travel, hospitality, media and entertainment are most at risk as consumers rethink spending.
“Retailers are most at risk. Seventy-nine per cent of consumers say they will reassess their spending with retail brands over the coming year. Travel and hospitality and media and entertainment also face the potential for lowered spend, with 78 per cent and 70 per cent of consumers, respectively, reporting reassessment plans in those sectors,” said Salesforce.
“An economy plagued by inflation and staffing shortages hasn’t lowered consumers’ expectations for top-notch service. Fifty-two per cent, in fact, expect a better experience from their favorite brands as a result of the current economic climate.
“The good news is these same consumers are clear about what they believe makes an improved experience. Seventy-two per cent say they will remain loyal to companies that deliver faster service, and 65 per cent say they will stay loyal if the company offers a more personalized experience.
Consumers also expect brands to use their data to offer more relevant customer services, with over 60 per cent reporting they expect companies to react instantly with the most up-to-date information when transferring across departments. Bolstering trust can also be an opportunity for loyalty; 76 per cent of consumers say that companies that provide data security will encourage their loyalty.”
In early January, Salesforce released its 2022 holiday shopping recap, analyzing November and December shopping data from over 1.5 billion shoppers on retail sites using Salesforce Customer 360 (including 24 of the top 30 U.S. online retailers).
While November’s online sales were lower than in 2021 and 2020, Cyber Week deals and Buy Online and Pick Up In Store (BOPIS) offerings helped retailers drive success in 2022. Across the 2022 holiday season, consumers spent a total of $1.14 trillion online globally and $270 billion in the U.S.
“Retailers closed out the 2022 holiday season with stronger online sales growth than expected – driven in large part by U.S. demand, steeper discounts on peak days, and BOPIS options,” said Rob Garf, VP & GM of Retail, Salesforce. “Staggering return numbers show that consumers are still cautious amid economic uncertainty, however.”
