The recent tenor of the retail industry in Canada has been turbulent, to say the least. Challenge upon challenge brought about by the COVID-19 global pandemic have in large part impeded normal operations, stunting growth and progress for many. The past 16 months, highlighted by the social restrictions and public health protocols that we’ve all been subject to, have also ushered in transformations, most notable of which are reflected in a changed consumer whose adoption of ecommerce and alternate modes of product delivery and pickup have dramatically altered the retail landscape. The quick shift in consumer behaviour has precipitated a digital acceleration within the industry. And, according to Myles Gooding, National Consumer Markets Leader & Global Consumer Markets Advisory Leader at PwC Canada, it’s a shift that retailers need to align their offering with in order to meet an anticipated boom in consumer spending and to meet their increasing demand for experiences in a post-pandemic world.
“We’ve obviously seen a massive adoption of online shopping,” he says. “This has been especially true with respect to fast-moving consumable goods like grocery, pharmacy and general merchandise. Consumers have adjusted to the online environment really well and are regularly leveraging a number of ways by which to receive product, including shopping online to have product delivered to their home or buying online and picking up in-store or by curbside. And their adjustment has been very quick. Grocery, for instance, basically jumped from 2 or 3 percent total revenue online to almost 11 percent. It’s a trend that’s represented fairly consistently across categories and verticals. The increase was so intense that it probably broke the system for some retailers. As a result, we’re seeing a lot of reinvestments by organizations in order to shore up their ecommerce and digital capabilities. Having said that, however, as the economy really starts to open up, we’re going to see a subsequent increase in physical foot traffic. While pessimistic during the lockdown period, consumers are starting to show a lot of optimism as we move closer toward a post-pandemic environment. Canadians want to get back out, touch and feel things, be more social and enjoy experiences again.”
Yearning for experiences
The growing collective yearn among Canadian consumers for experiences is captured within PwC’s Understanding the Canadian consumer of the moment: Canadian Consumer Insights 2021, Pulse 2 report. Based on a recent survey of Canadian consumers, the report finds that only 26 percent have become more optimistic about the Canadian economy over the course of the past 6 months, representing a maintaining of the caution and concern with which people across the country have approached their spending. However, when looking ahead to a post-pandemic scenario, responses indicate a sharp rise in confidence and a potential increase in spending within certain categories. For example, while 53 percent of Canadian respondents expect to eat and drink in restaurants and bars in the next six months, that number jumps to 63 percent when looking post-pandemic. And similar significant increases in consumer attitudes are apparent when asked about their likelihood to travel domestically in the next six months versus post-pandemic (22% vs. 51%) and attend mass social events (21% vs. 40%). It’s a shift in sentiment that, at long last, seems to bode good news for those operating within the industry, presenting what Gooding describes as “big opportunities” to deliver what the post-pandemic consumer will be craving.
“That’s the biggest callout within the report: the fact that consumers want great experiences again and that when they have access to them, they’re going to be seeking them out,” he asserts. “To meet their needs and satisfy the experiences that they’re going to be demanding, retailers will be required to develop and deliver a balance of digital and physical offerings, communicating and engaging with them and ensuring product fulfillment in ways that appease their preferences and expectations. It’s all going to be about providing an exceptional experience as retailers everywhere continue to navigate the evolution that’s been intensified by the pandemic.”
Though crafting this experience is, of course, no small feat for retailers to achieve, especially given a shifting landscape and behaviour within the industry, it’s providing the prospect of enhancements in customer service and an increase in meaningful engagement among brands and their customers. And, as the report suggests, there isn’t a reinvention that’s required, but rather a refining of tried and tested levers that are already at the disposal of organizations. According to the report, 46 percent of Canadian shoppers rank customer service as a top-five characteristic that drives brand loyalty. Further, more than one in every two Canadians (52%) consider loyalty programs to be a significant driver of their spend. And, as Gooding points out, this is exactly where the confluence of the digital and physical retail worlds come together to incredible effect.
“As our research shows, in-store remains the most popular shopping channel for Canadian shoppers, with 69 percent buying in-store at least once a month,” he explains. “Retailers are acutely aware of this and will increasingly be exploring ways and tools that they can leverage in order to bring foot traffic into their stores. And, in order to support the experiences that shoppers are going to be looking for, brands will be focussing on providing superior levels of reliable in-store customer service. From a digital perspective, the ways that retailers start to leverage their loyalty programs and combine the data that’s generated in-store with the data generated online, will be critically important. We’ve seen consistently throughout our research that Canadian consumers really gravitate, more so than other locations globally, toward loyalty programs. The benefits to retailers are clearly twofold, allowing them to deliver what the customer wants, supporting their desired experience, while gaining valuable information about their customers. The additional data that’s generated, especially as the industry continues along a digital transformation, will increasingly drive decision-making with respect to a number of strategic and operational aspects, including real estate, merchandising, marketing, inventory and everything else in between.”
Lagging sustainability; supporting local
The report also explores Canadian sentiment toward sustainability, finding that, although their eco-consciousness has risen during the pandemic, the associated behaviour of shoppers in the country lag behind those of their global peers in every category that they were asked about. For example, just 48 percent of Canadian respondents plan to purchase items with eco-friendly packaging compared to 54 percent of global respondents; 46 percent of Canadians plan to purchase from companies with initiatives that support the environment as opposed to 54 percent globally; while only 41 percent of Canadians check the labelling for sustainability certifications compared to 52 percent of respondents elsewhere in the world. The report cites price as the predominant factor of Canadians’ sustainability malaise, with 48 percent stating that they feel sustainable products are priced too high. Despite this, however, it seems that the value of protecting local business and production is one aspect of sustainability that’s not lost on the Canadian shopper, with much of their focus being paid toward supporting the survival and success of local, independent retailers. In fact, the report suggests that a whopping 48 percent of respondents say they’re actively shopping more with local merchants.
“Independent retailers in certain categories throughout the country, especially food retailers, have experienced a bit of a surge in activity during the pandemic,” Gooding points out. “One of the drivers of this behaviour is the fact that during a situation like a pandemic, people tend to look inward and display a need to protect themselves and those around them. For this momentum to continue for independent retailers, focussing on differentiators around sustainable, locally-sourced products that are unique to the shopper and not always available at the big box stores will be crucial. It’s going to allow them to maintain stickiness with the consumer. And, of course, to support their product offering and to really take advantage of the desire in Canadians to shop local, independent merchants will need to ensure greater accessibility through the development of their digital and ecommerce capabilities.”
Aligning values and beliefs
In addition to a heightened sense of obligation toward supporting local merchants, Gooding also suggests that, based on PwC research, there is also an increasing need among consumers to align with the brands that most accurately reflect their values and beliefs as people. He recognizes that it’s a trend that’s been gaining traction in recent years, driven primarily by the younger generations, but says that its an aspect of the retail environment that, like so many others, has been accelerated as a result of the pandemic and the requirement of consumers to circumvent barriers and impediments to purchasing and spending.
“The post-pandemic consumer is going to be even smarter and savvier than ever before,” he predicts. “They’ve learned and evolved so much in such a short amount of time. They possess a comfortability with the technologies they’re using and know where and when to procure product based on a plethora of information. And they know where to find that information and disseminate it in order to inform their decisions, empowering them to choose the brands that they want to shop with. Increasingly, this is leading consumers to not only look for deals on the product they want, but to seek out brands based on the values they stand for. Does the brand believe in the same things as the consumer? Where and how are their products made? Are their products and the materials that they use ethically-sourced? These questions are becoming very important when it comes to cultivating loyalty, making a company’s values something of a new business currency.”
Preparing for a rebounding economy
As much of the industry continues to reflect on a challenging 2020, and an equally challenging first half of 2021, Gooding references findings from another recent PwC report titled From optimism to opportunity: 24th CEO Survey—Canadian insights that indicate a brighter, more prosperous future for the industry. Of Canadian CEOs surveyed for the report, 72 percent are expecting global economic growth to improve over the next 12 months. He says that their confidence is a very good sign, adding that there are boundless opportunities ahead for the retailers that can continue to evolve and grow based on the learnings they’ve received as a result of the pandemic and apply them to their operations in order to create an exceptional experience for their customers.
“The big takeaway that the pandemic has left with the retail industry is the need for increased agility and the ability to pivot on a dime. If you aren’t agile going forward and can’t pivot, it could be your downfall, because the pandemic is not the only disruption that retailers will face. Climate change is creating challenges. And we’re currently undergoing a global supply chain disruption as well, placing further pressure on procurement and the supply chain. Retailers have got to be able to make their products available to their customers and to transfer that product in a quick and efficient way. If organizations can enable themselves with that agility and find the right balance between digital and physical retailing, they’re going to be positioned well to capitalize on an economic snapback that we’re expecting to occur. There’s a lot of pent-up demand and money that’s been saved by Canadians over the last 16 months. The retailers that can offer the consumer a reason to engage with them, providing them with the experiences they’re hungering for, should enjoy significant success over the months and years to come.”