Global Report Reveals that Canadian CEOs are the Most Optimistic Heading into a Post-Pandemic World

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There really is something unique about the perseverance and general attitude of Canadian business leaders. They are qualities that have been present throughout the industry from its earliest beginnings. And, despite the turbulence and uncertainty faced by many businesses throughout the course of the past year-and-a-half, they are qualities that persist today. In fact, according to KPMG’s 2021 Global CEO Outlook report, the most optimistic CEOs are those of companies operating in Canada. When looking ahead over the next three years, they are most confident in their outlook. It’s a sentiment that Peter Hughes, Partner, Customer and Digital Services Leader, KPMG Canada, believes speaks volumes of the industry’s recovery efforts and is being driven by a number of different forcing functions.

“From a retail perspective, there are four main things that are fuelling the optimism,” he says. “As a nation, Canada is one of the most highly vaccinated countries in the world. Interest rates continue to be very low. Organizations are feeling a lot more confident now that re-openings that have been occurring across the country are going to be sustained. And, when it comes to the Canadian consumer, there has been a lot of pent-up savings and a somewhat reassessed outlook on life. People haven’t exactly spent, let alone splurged, over the course of the past year-and-a-half. And, combined with a nuanced outlook on life that’s going to include accessing experiences and consuming things that make them happy, it starts to paint a very positive picture going forward. And Canadian CEOs are responding to those factors.”

Optimism amid uncertainty

According to the report, an overwhelming majority of Canadian CEOs (85%) are confident in their company’s three-year growth prospects, with more than three-quarters (77%) believing that the industries they operate within will experience similar growth to their own. And, as Hughes points out, the intersection of vaccination levels in the country, long constrained consumer demand and built-up savings are fanning the flames of optimism within the country, reflected in the report’s findings that nearly nine in ten (89%) CEOs in Canada are feeling confident about the country’s economy. Despite the positive outlook, however, there remain a number of influences that Canadian CEOs perceive as threats to the future growth of their businesses. Among them are risks associated with regulations, cybersecurity, operations and the environment. And at the top of the list, fuelled in part by the accelerated digitization of the world around us, is emerging and disruptive technologies.

“As businesses become more digital, they continue to become increasingly complex,” he says. “There’s a much greater reliance today on a company’s digital footprint. As a result, Canadian companies are exposing themselves more and more to the negative threats that are associated with emerging technologies and the digitization of the environment. And, this dependency on the digital footprint is also placing new pressures on the retailer’s balance sheet. On an earnings call three years ago, if a retailer was to report that their online sales represented anywhere from two to five percent of total sales, it would have been fine. But if the same retailers were to say that now, there would be a dramatic impact on earnings and price. As a result of the digitization of the industry, the expectations of retail teams to understand these emerging technologies and to leverage them to their greatest effect have risen tremendously.”

Technology and innovation

Conversely, and perhaps not surprisingly, although seen as the greatest impediment to growth for Canadian CEOs, emerging technologies are also being identified as a conduit or lever of opportunity. In fact, according to the report, nine in ten (91%) CEOs actually consider emerging and disruptive technologies as more of an opportunity for growth rather than a threat to it. In addition, the digital revolution seems to have spurred a more proactive approach to technologies among Canadian CEOs, with 86 percent stating to be more actively disrupting their sectors now than they previously had, while four in five (81%) describe their digital investment strategy as “aggressive”. It’s an approach that’s yet another signal of the confidence held by CEOs concerning their organizations. And, it’s one that Hughes believes better prepares businesses with greater flexibility and potential for further growth.

“The pandemic has accelerated a lot of different trends and behaviours,” he asserts. “It’s driven retailers’ move into the digital space and ecommerce transactions, as well as the development and enhancement of contact centres. To support growth in this new environment, retailers have to become a lot savvier around the ways they achieve velocity. And one of the areas of growth that they’re recognizing is in building the ecosystem around them. Instead of trying to do everything themselves, they’re outsourcing some core things for the sake and benefit of velocity. Doing things this way allows retailers to be much more creative in the way they build and assemble their systems. It’s requiring a rethink of how the technology architectures of the business are constructed, moving toward architectures that other organizations can plug into and which can plug into other systems. Rather than limiting themselves by their technologies, businesses are increasingly leveraging them to create nimbleness and to support the expansion of ecosystems and the development of joint ventures.”

Intelligent acquisitions

In addition to the development of aggressive digital strategies and exploration of creative partnerships as ways to achieve growth, it seems that Canadian CEOs are also identifying mergers and acquisitions as areas of opportunity. Results of a recent poll conducted by KPMG indicates that almost one third of small- and medium-sized businesses operating within the country are favourable to acquisition. And, as many larger organizations in Canada have amassed considerable capital over recent years, conditions at the moment could be ripe for acquisitions. But, as Kostya Polyakov, Partner, Canadian National Industry Leader, Consumer & Retail, KPMG Canada, explains, the acquisitions are going to be intelligent, driven by pointed investments that will deliver shareholder return and support growth for the business.

“Historically, when retailers were making acquisitions, they were often buying expanded production and brands, representing like-for-like acquisitions,” he says. “But today, it’s all about industry convergence. Retailers understand that whatever operational or technological component that their business is missing can easily be bought. It’s not cheaper to buy it than to build it. But it’s faster. And, as CEOs are expected to deliver shareholder value and to continue driving their businesses forward, they’re looking to mergers and acquisitions as the fastest way to do that, providing them with technologies and innovation that enable them with capabilities that they didn’t have before. There will also be some transactions involving channel expansion in order to support businesses development of omnichannel capabilities and offering. And, because there has never been a more competitive talent landscape in Canada than there is currently, we’re also going to see transactions with the sole purpose of acquiring talent.”

Values and purpose

In addition to accelerating retailers’ need to digitize their businesses, impacts of the pandemic have also prompted Canadians to reassess their values and the things that are most important to them in their lives. And, CEOs in the country have stated to have experienced significant demand from stakeholders to address environmental, social and governance (ESG) issues. Those applying pressure on organizations to do so include institutional investors (59%), regulators (29%), customers (7%) and employees (5%). As a result, Canadian CEOs are not only seeing ESG improvements as the right thing to do, the report reveals that nearly nine in ten (79%) believe that establishing and nurturing a corporate purpose will help drive financial performance. It’s an issue that Polyakov says is gaining momentum, and one that will continue to increase in relevance and importance going forward.

“There’s still a bit of a gap between the younger generations, who are primarily driving the need for these changes, and the CEOs of companies,” he admits. “That change in thinking hasn’t fully happened yet, but it’s certainly happening. Most companies have experienced sustainability and climate change gains throughout the pandemic as a result of less travel and emissions being put into the environment. And most consumer retail CEOs have said that they want to maintain that positive trajectory. It provides them with the opportunity to really make ESG issues a focus of their organizations. As a result, they can identify the issues that are most natural to their businesses, develop plans that are executed, measure results and share them to ensure accountability. By doing this, providing transparency around their efforts, they have a big opportunity to align their values and purpose with those of their consumers.”

Reflecting diversity

Though there are a number of different ESG issues that organizations could potentially focus on to support their corporate purpose, the matter of diversity, equity and inclusion is perhaps most important for retailers to address. Polyakov says that making improvements in this area is high on the list of priorities among Canadian CEOs, adding that the motivator to do so is no longer simply about ensuring a broader, more varied voice and opinions at the executive table. Today, it’s also about attracting the right talent and making sure that their organizations are perceived as accessible and inclusive to them as employees.

“Nobody has any idea where talent’s going to come from, what it looks like, what colour their skin is or what their orientation is,” he asserts. “And, currently, there just isn’t enough talent to go around. Organizations have got to ensure that their culture can attract any kind of talent and retain them. In addition, because the markets Canadian retailers are serving are so diverse and want to see a reflection of themselves in the brands that they shop with, they’ve got to make sure they’re delivering on that, developing a culture that supports these initiatives.”

Driving opportunities

As evidenced by much of the findings within the report, there seems to be a reciprocal effect between the confidence of Canadian CEOs and their determination to grow in a post-pandemic world. And, they seem to have already dug their heels in, committing to the means by which they’re going to attempt that growth. Through technology and innovation, the development of corporate purpose and a heightened focus on people, CEOs across the country are hoping to realize opportunities that will reap rewards for their organizations today, standing them in good stead as we continue headlong into an increasingly competitive, digitized and purpose-driven world.

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Article Author

Sean Tarry
Sean Tarry is an experienced writer who leverages his unique storytelling abilities to bring retail industry news and analysis to life. With 25 years of learning, including over a decade as Editor-In-Chief of Canadian Retailer magazine, he’s equipped with a deep understanding of the unique world of retail and the issues, trends, and innovators that continue to influence its evolution and shape its landscape.

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