Geopolitical tensions, environmental concerns, rising prices and reduced spending power are motivating Canadians to cut back and entrepreneurs can respond, according to the latest edition of BDC’s 2023 Consumer Trends report.
“These trends have become part of our daily lives and we realize that they are associated with the larger trend of consuming and owning less, whether it’s a conscious choice or to save costs,” said Pierre Cléroux, vice-president Research and Chief Economist at BDC (Business Development Bank of Canada). “Today’s prudent consumers have different expectations; it’s important to keep these in mind when adjusting to shifts in their behaviour.
“This is our third study once we realized trends have changed quite a bit. The last study was 2016. And the trends are quite different this time.”
The study found three emerging trends with important implications for all businesses, regardless of size or industry:
- The client is always right. 34 per cent of Canadian businesses have redesigned the customer experience even though most consumers (90 per cent+) strongly agree that a simple and satisfying experience is fundamental to the consumer-business relationship. Proactively managing online reviews can help entrepreneurs who have a strong presence with younger generations keep track of what’s being said online and correct points of misinformation. Technology can help for many aspects of the clients’ journey, from marketing automation to e-commerce websites to identifying the right channels to effectively deliver customer service;
- Less is more. Only one in 10 businesses offer a way for consumers to purchase used, refurbished, or returned merchandise. Entrepreneurs are not honing in on a trend that appeals highly to Millenials, Gen X and Baby boomers alike. In fact, almost two-thirds (61 per cent) of consumers prefer to live simply. Entrepreneurs can help their clients consume less, by rethinking their product design to improve their environmental footprint. Another prime example of appealing to different generations is to segment messages to personalize communications based on past purchasing behaviour;
- It’s not me, it’s you. Consumers want businesses to inspire trust and just over half of them (56 per cent) have stopped buying from companies whose business practices they don’t agree with. To be a better corporate citizen, entrepreneurs can consider third-party certification to acknowledge they live up to the highest standards. Knowing what makes their customers tick shows that they care and helps differentiate from competitors.
Cléroux said the first trend about consumer experience is new.
“Over the last year, people have been using online much more. The expectation is really now that you should get the same experience online or in the store,” he said. “The expectation is much higher than it was.
“There’s an expectation that businesses should be a good corporate citizen. It’s the first time we’ve seen this trend. This is really new in terms of what we have been seeing over the last three reports . . . The importance of being a good citizen it’s more important for the younger generation and that’s important because that’s the next consumer. So that’s something to keep in mind.”
Cléroux said the research has indicated that consumers are slowing down in consumption.
“There’s two reasons. First is the financial pressure. And the second is about 40 per cent were saying they want to reduce their consumption because they worry about the environment. If we go back to the financial pressure, there’s no doubt that the last year has been hard on consumers. Inflation has been high. Interest rates have been increasing. People pay more. A lot of Canadians are paying more every month for their mortgage so they don’t have the same amount of money to spend,” he said.
“This is very related to the current situation. The pressure on people’s wallets is really there and that’s what we see in the result of this third report.”
Cléroux said that in this environment businesses have to give more options to the consumer who are looking to reduce their spending.
The BDC said that back in 2016 when it conducted a similar study, Millennials were driving the hyper-connected consumer revolution, sharing platforms were only emerging and there was a need to better target consumers with personalized messages and experiences.
This report said few businesses (29 per cent) are taking a generational approach to the products and services they offer, although behaviour, values and beliefs vary by age. For instance, environmental considerations are more important for Millennial consumers. Taking a generational approach to understanding purchase behaviour can be valuable to businesses looking to better target their customers, as not all trends are expressed the same way, it said.