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Canadian Consumers Changing Shopping Patterns Due to Inflation: Report

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A new report by Salesforce, a global leader in Customer Relationship Management, indicates increasing inflationary pressures are impacting the shopping behaviour of Canadian consumers. 

Rob Garf

“Challenges that consumers experienced this holiday, including inflation and low inventory, haven’t dissipated in the new year,” said Rob Garf, VP and GM of Retail, Salesforce. “While digital commerce continues to prevail, it’s clear that inflation is having an impact on overall consumer spending. With these persistent headwinds, retailers must remove friction and enhance experiences by knitting together offline and online shopping.”

The company’s February Shopping Index Report, which analyzed data from over a billion shoppers globally, found that as inflation drove higher prices Canadian retailers experienced a dramatic drop in online revenue by 21 per cent year over year. Globally, retailers experienced only a five per cent decrease.

The report said prices for consumers in Canada rose 10.4 per cent year over year in February while global prices rose 4.4 per cent.

Garf said consumers took a break in some categories.

Harry Rosen on Bloor (Image: Dustin Fuhs)

“Inflation will be and has already been one of the key story lines of retail in general and digital specifically,” he said. “Consumers are paying more for a product which means they are shopping at fewer brands and retailers and they’re buying fewer items at brands and retailers because of the increases of prices due to inflation.”

In this environment, retailers are trying to find new and creative ways to attract new customers. They’re reaching out to new digital destinations, social media, messaging platforms, gaming consoles. 

“They’re finding new ways to retain loyal shoppers and a significant mechanism for that is the revitalization of loyalty programs – a way for retailers to better understand who the consumers are because they’re knowingly providing information about themselves with the caveat that they’re going to get value in exchange,” said Garf.

“Survey after survey after survey, the number one value of course is price and convenience but creeping up on the list continually but only accelerating in the last 12 months is things like access to product or special promotions and offers to them, a more personalized general connection.”

Royal Canin Supply Chain Notice at Pet Valu (Image: Dustin Fuhs)

The Salesforce report said inventory in February shrank by 22 per cent in Canada and five per cent globally as retailers and consumers continued to grapple with supply chain issues and rising costs brought on by inflation.

Product categories with the highest price growth globally in February include: Home, Furniture (21.8 per cent); Home, Appliances (17.9 per cent); and Home, Dining, Art & Decor (11 per cent).

Product categories with the least price growth globally in February include:

Active Footwear (1.3 per cent); General Footwear (0.8 per cent); and Electronics and Accessories (0.5 per cent).

Returns and Exchanges at Canadian Tire (Image: Dustin Fuhs)

“There’s something to be said about discount retailers, off-price retailers. Let’s not forget there was still a lot of product in Q4 and this Q1 that was stuck off the shore and waiting to be put into the inbound supply chain. Some of that stuff was so seasonal, it has to go. There’s only so many things you can do with it. Sell it at a steep discount, put it through a liquidation channel, save it for the next year,” said Garf.

“A lot of retailers’ motion is to ship it off to an off-price retailer for pennies on the dollar. So those categories will do really well.

“I also think the resale market is ripe for a surge. Part of it is sustainability and not trying to fill up landfills. Part of it is, the clothes that we bought we might not need but there are more platforms that allow us to find buyers for it at discount rates.”

Article Author

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 National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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