Advertisement

The Rising Cost of Living in Canada is Eroding Brand Loyalty as Consumers Seek More Cost-Effective Alternatives [Op-Ed]

Date:

Share post:

As Canadians grapple with the rising cost of living, many consumers are reevaluating their daily choices and purchase habits. The cost of groceries is forcing many households to make difficult decisions, like having to choose between food quality and affordability.

Amid these economic pressures, the concept of brand loyalty — the preference consumers have for a particular brand over others — is undergoing a significant shift. Brand loyalty is the result of a mix of factors, including trusthabit and the perceived value of goods.

Brand loyalty significantly benefits retailers by boosting sales. Not only do existing customers spend more money than new customers, but brand loyalty also reduces the amount brands need to spend on advertising. Effective loyalty programs increase customer retention and result in positive word-of-mouth, meaning companies can spend less on marketing.

Losing loyalty, on the other hand, can result in a competitive disadvantage for retailers. It can lead to revenue loss, increased marketing and customer acquisition costs and negative word-of-mouth.

Once a cornerstone for many food retailers, brand loyalty is eroding as consumers prioritize immediate cost savings over long-term brand relationships.

Adapting to rising food costs

Inflation is impacting a wide range of income groups: 81 per cent of lower-income, 50 per cent of middle-income and 35 per cent of high-income earners in Canada are impacted by inflation, spending less on clothing, beauty products and big-ticket items.

Consumers have been adopting various strategies to manage their budgets. Three-quarters of Canadians say they dine out less often because of the rising cost of living, and 70 per cent say inflation has shifted the way they cook.

Despite rising grocery prices, eating at home is still more budget-friendly than eating out and allows for better control over the cost of ingredients.

Some Canadians are also modifying their eating habits by altering portion sizes, cutting back on pricier food items and focusing on more affordable staple foods. While these changes help consumers deal with rising costs, they also come at the expense of brand loyalty.

The digital landscape is also playing a key role in this shift. Consumers are increasingly turning to digital platforms to find economical food options. The convenience of online marketplaces and food delivery services exposes them to a wide array of product choices and competitive pricing.

Consumers also use online tools like coupons and price comparison options to seek discounts. Loyalty programs lose their appeal when consumers prioritize immediate savings.

This transparency and the ease of comparing prices online encourage consumers to explore various brands, making it more challenging for traditional food brands to sustain customer loyalty.

Changing consumer priorities

As prices rise and budgets tighten, consumers are more inclined to seek out more cost-effective options, which often means abandoning favourite brands in pursuit of better value.

One report found that 42 per cent of consumers now seek sales or shop clearance, 40 per cent adhere to a budget, 28 per cent buy less overall and 25 per cent prefer bulk stores or warehouse retailers.

In pursuit of cheaper alternatives, consumers become more open to trying private-label or store-brand products, discounted brands and generic or unbranded options. These alternatives provide shoppers with a practical way to cope with rising prices, allowing them to manage their expenses while maintaining a satisfactory level of product quality.

People shop inside a grocery store in Toronto, on July 18, 2023. THE CANADIAN PRESS/Cole Burston

Inflation also leads to changes in spending habits in a phenomenon known as consumption smoothing. This often involves delaying the purchase of durable goods, prioritizing the purchase of necessities and opting for store-brand products.

In essence, consumers shift their priorities toward cost management, which in turn reduces their loyalty to specific brands. Food companies need to adapt to these changing consumer needs by recognizing affordability and value take precedence in an inflationary market.

What can retailers do?

The shift away from brand loyalty can pose challenges for business owners and retailers who depend on consumer spending. Aside from the most obvious solution to the issue — lowering prices — there are other things retailers can do to win back customers.

First, retailers can use dynamic pricing, allowing them to adjust prices based on factors like supply and demand, inventory and competition. This approach enables them to offer competitive prices and discounts while also minimizing food waste.

Second, retailers can also introduce loyalty programs that go beyond conventional point-based systems. By using personalized data from consumers, retailers can tailor rewards and incentives to match individual shopping habits, experiences and preferences. Retailers can also collaborate with other businesses and incorporate gamification elements to further enhance loyalty.

Lastly, retailers should consider using a value-oriented marketing approach to elevate consumer experiences. Retailers should communicate the value of their products, emphasizing quality, nutritional benefits and unique features to justify their price points.

Simultaneously, investing in exceptional customer experience, both in-store and online, can foster strong emotional connections between retailers and consumers. When consumers feel valued by brands, they are more likely to stay committed to that brand’s products. By assuring customers of their commitment to value, retailers can play a crucial role in guiding consumers through these challenging times.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Omar H. Fares, Lecturer in the Ted Rogers School of Retail Management, Toronto Metropolitan University and Seung Hwan (Mark) Lee, Professor and Associate Dean of Engagement & Inclusion, Ted Rogers School of Management, Toronto Metropolitan University.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From Retail Insider

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Oakridge Park in Vancouver Announces Opening Date

Oakridge Park has announced its opening date as the massive Vancouver mixed-use development prepares to debut luxury retail, dining and public spaces.

Canadian Retailers Keep Expanding, So Why Are Jobs Disappearing?

Canadian retailers continue expanding while retail employment declines, raising questions about staffing, service levels, and the future of in-store retail.

What Happens to 128 Warehouse One and Bootlegger Storefronts Across Canada?

The liquidation of Warehouse One and Bootlegger leaves 128 retail spaces vacant across Canada, many in regional malls and smaller markets.

YYOGA Expands Across Canada Through Franchising

YYOGA plans national expansion through franchising as demand grows in Vancouver and beyond, with new studios and community-focused ownership.

Pandora adds carbon footprint disclosure to lab-grown diamond collection

Pandora formally presented the new carbon disclosure approach at the Global Fashion Summit in Copenhagen, a sustainability-focused gathering for the fashion industry.

Lougheed House, Burwood Distillery partner on limited-edition gin in Calgary

A portion of proceeds from each bottle sold will support the Lougheed House Conservation Society.

Survey finds most Canadians changing spending habits amid rising living costs: Harris & Partners

94.2 per cent said economic factors including inflation and interest rates are affecting their financial plans, while 93.6 per cent reported that rising day-to-day costs are putting pressure on their finances.

Cabot partnership to add golf course, hotel and luxury residences at Revelstoke Mountain Resort

The project, called Cabot Revelstoke, will include an 18-hole public golf course, a 155-room mountain lodge and a limited collection of luxury residences.

Daily Synopsis: May 8, 2026

Leon's sees Q1 dip, Grocery store expansion in BC, city-run grocery stores could have benefits, Metropolis at Metrotown Centre marks 40 years, FreshCo expands in Ottawa, and other news.

MANMADE Opens First Store at CF Carrefour Laval

MANMADE opens its first store at CF Carrefour Laval, marking a shift from DTC as the Montréal brand expands into physical retail.

Frette Opens First Canadian Boutique in Toronto’s Yorkville

Italian luxury linen brand Frette opens its first Canadian boutique in Toronto’s Yorkville with a new experiential retail concept.

Canadian unemployment rate increases in April: Statistics Canada

April marked the second consecutive month of little change after a February decline of 84,000 jobs, Statistics Canada said.

Affordability Is Changing How Canadians Eat Protein

Rising food costs and shifting consumer priorities are driving more Canadians toward flexible eating habits and changing protein consumption patterns.

Leon’s Furniture sees dip in sales in Q1

Q1 Revenue was recorded at $557.2 million, a decrease of 3.8%, driven primarily by timing of delivered sales in the furniture category as compared to Q1 last year, a challenging macro environment and unfavourable weather.

Hatch’d launches National Nursing Week fundraiser for Stollery Children’s Hospital No Bounds Campaign

The initiative is called Fuel the Frontline, and Hatch'd is turning every breakfast order into a contribution to something bigger than a meal.

Mic Mac Mall unveils Happy to Chat seating areas

When a guest sits in these marked seating areas, it indicates to others that the person is open to striking up a conversation.

Charcoal Group to open five new restaurants across Ontario

Charcoal Group, with over 65 years in the hospitality industry, has a group of full-service restaurants across in Southern Ontario.

Warehouse One Collapse Signals Structural Shift in Canadian Apparel Retail

The collapse of Warehouse One and Bootlegger reflects mounting pressure on Canada’s middle-market apparel sector and regional malls.

Loblaw Says ChatGPT Grocery Integration Is Ahead of Plan

Loblaw says customer adoption of its ChatGPT grocery integration is ahead of expectations as the retailer expands AI initiatives.

Daily Synopsis: May 7, 2026

Aritzia's record fiscal results, H&M brings Stella McCartney to Canada, Millarville General Store marks 100 years, Food Basics opens in Grand Bend, Kingston Road Heritage building facade destroyed, and other news.