Consumer Segment Study Shows Range of Optimism and Pessimism Among Canadians

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During the COVID-19 pandemic, four consumer segments have emerged in Canada, according to a new report by EY.

COVID-19 HAS REVEALED FOUR CANADIAN CONSUMER SEGMENTS

In terms of demographic distinctions, the four segments reflect how consumer sentiment deviates between certain factors such as age, family structure, and employment status, said the report:

  • Save and stockpile (35.5 percent of consumers): These consumers seem more conservative, showing higher concern for their families and the long-term outlook. More than a third (37 percent) are now spending more on groceries, while most are spending less on clothing (73 percent) and leisure (80 percent);

  • Cut deep (27 percent of consumers): This segment of consumers is mostly aged 45 years and older and about 25 percent have lost their jobs either temporarily or permanently. As a result, the majority (80 percent) of them are shopping less frequently, with more than half (60 percent) buying essentials only. In terms of brand perception, 35 percent believe that brands are far less important in the current climate;

  • Stay calm, carry on (25.2 percent of consumers): These consumers do not feel directly impacted by the pandemic and are not changing their spending habits. In this segment, 16 percent are spending more on groceries, which is the lowest compared to the other segments. Similarly, their consumption patterns across clothing and footwear decreased the least compared to the other segments (34 percent); and

  • Hibernate and spend (12.3 percent of consumers): Mainly those ranging between the ages of 18-44, including millennials and Gen Z, seem to be the most concerned about the impact of the pandemic. They have increased grocery spend the most (57 percent) spending more compared to the other segments. However, they have also increased spend across clothing (nine percent) and leisure (29 percent) the most, with 51 percent of them highlighting that brands are now more important to them.

Rodger So, Partner and Western Canada Consumer and Technology Leader for EY, said consumer behaviour is changing and technology is a driver of that disruption.

“The paradigm has been shifting way before 2020 and COVID-19 in many ways accelerated those trends and we think it’s important for us to anticipate how that consumer world will change and evolve throughout COVID and post COVID. This study has really been helpful for us to get a glimpse of where that’s heading toward and how that’s shifting,” said So.

“We feel that consumers shape the future where businesses can thrive in a post COVID world.”

FIVE CANADIAN CONSUMER SEGMENTS ARE FORECASTED TO FOLLOW THE COVID CRISIS

According to the EY report, these are the next five consumer segments that will appear following the COVID crisis:

  • Get to normal (28 percent of consumers): The majority (63 percent) are above the age of 45. They are mostly indifferent about the future and appear to have the lowest trust in any institution. About 41 percent responded that they are unlikely to pay a premium for goods and services at all, the highest among all segments, and they are somewhat indifferent about actions taken by brands to mitigate the COVID-19 impacts. They are also the least willing to share their data compared to the rest of the segments;

  • Cautiously extravagant (25 percent of consumers): This segment reports a high level of optimism across all segments despite high recession concerns. Nearly half (47 percent) of respondents believe that leisure activities will return within weeks to the way they were before COVID-19 and 66 percent expect to spend more on leisure activities in the long term. More than three quarters (76 percent) believe the way they travel will return within months to the way it was before the pandemic, with 65 percent expecting to spend more on their vacation plans. They are the most willing to share their data if it helps find a vaccine or develop treatments;

  • Stay frugal (23 percent of consumers): This segment includes representation from all age groups and remains the most pessimistic about the future. About one third (32 percent) or more are concerned about how they will travel, access health care, socialize or shop after the pandemic; 67 percent will likely decrease their spend on vacations, 55 percent on leisure, and 65 percent on restaurants. This segment is highly sensitive to price, with 62 percent responding that luxury has become less important. However, 42 percent would pay a premium for products made domestically;

  • Keep cutting (15 percent of consumers): Mostly aged 45 and older, these respondents believe more than other segments that it will take a long time to return to the way it was before COVID-19. Approximately three quarters (74 percent) expect a global recession and 53 percent are extremely concerned about their jobs and finances. In terms of spending, 57 percent cited purchasing essentials only and 54 percent indicated that they will change the products they buy as a result of the pandemic; and

  • Back with a bang (9 percent of consumers): This is the smallest group of respondents, mostly aged below 45. Their key concerns about the impact of the pandemic are jobs and finances, as well as their family wellbeing. They are the most optimistic about the future — 50 percent are spending more on groceries and they consider price as a key factor in determining which items to buy, while 34 percent are willing to share their data if they are rewarded.

So said almost half of the respondents in the EY survey expect to go back to normal in a few months.

“For now, it’s important that companies focus on making consumers and staff feel safe and continue to have the (good) customer experience,” he said. “But we also found that two thirds of respondents feel they’ll be going to stores less. It’s more important than ever that (company’s) continue to invest in the omni-channel experience and we feel that those that embrace online shopping will have a faster recovery.”

So said this is the perfect time for companies to think about their business model.

“A lot of the retail and restaurant clients that I’ve been talking to in the last couple of months are still very focused on the now. The reacting stage. How are we reacting to COVID? Survival and resiliency is really top of mind,” he said. “But now that things are starting to get a little bit normal we’ve been talking to clients about the next step beyond because we know that customer behaviour is changing and through the COVID it will continue to change.

“So we feel at EY that companies need to understand behavioural changes and customer changes in order for them to serve customers better and be ready for that future consumer.”

So said COVID has indeed fundamentally disrupted businesses but this is also an opportunity to make investments for the future.

“Be innovative and of course be agile by shifting to a more resilient and nimble operating model. Companies who are very stagnant and not nimble and stay with the old ways will see themselves fall behind very quickly,” he said.

Article Author

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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