“Rising prices, a potential recession and high levels of uncertainty weigh on the minds of Canadian consumers. Nearly half (47%) told us they’re either very or extremely concerned about their personal finances. And 70% are cutting back on non-essential purchases in response.
On the surface, this may seem like a bleak forecast for retailers and consumer goods companies. But that overlooks the resilience of Canadian consumers. Year-over-year retail sales are actually up in recent months, according to Statistics Canada. Shoppers are still spending—albeit with greater price sensitivity and a desire for enhanced digital and in-person retail experiences.
At the same time, businesses have new avenues for meeting these evolving expectations and differentiating their brand by reducing costs and creating frictionless experiences. Combining human ingenuity, expertise and technology-enabled innovation lets you reimagine your operations in ways that help win market share today and position your organization for future growth.
The findings from our latest Global Consumer Insights Pulse Survey can help companies on this journey. We heard from more than 500 Canadian respondents from across the country, as well as thousands of their peers around the world, in late 2022. They told us about their shopping habits, spending intentions, friction points and what they value the most when interacting with brands. What stood out to us was the high standards shoppers have for retailers and consumer goods companies. They expect fast and efficient service—but also prioritize meaningful and trustworthy interactions.
But, at the same time, the number of consumers who plan to decrease their spending climbed since our last survey—another sign of Canadians’ growing concerns about their personal finances.
Consumers also told us about their in-store shopping trips, including what frequently detracts from their experiences. Unsurprisingly, rising prices for household goods was far and away the most common answer, cited by 67% of respondents.
Among the next tier of responses, one in particular stood out to us. Nearly one-quarter (23%) of Canadian consumers say stores feel busier and they frequently stand in long lineups. For many retailers, this stems from the widespread labour shortage affecting the wider economy. Unfortunately, few expect the situation to imminently improve. In fact, our 26th Annual CEO Survey found 46% of Canadian consumer markets CEOs expect employee resignations and retirements will increase throughout 2023.
Greater use of automation and other technologies can be an effective response to this challenge. And it’s also an opportunity for retailers to set themselves apart.
We’ve seen successful retailers start with a clear vision of the frictionless shopping experience they want to create. In addition to changing the checkout process, it might include consumers downloading personalized offers to their phone as they enter your store. Or using your company’s app to browse products while they’re in your store (something 34% of Canadian consumers find appealing).
Our colleagues in the United Kingdom recently explored how decisions on which technologies to introduce—as well as when, where and how to roll them out—can align with your strategy, operating model and customer preferences. It’s also important to think about the metrics you’ll use to measure the performance of your new offerings as well as the employee training and capabilities needed to support them.
For retailers, the payoff goes beyond customer satisfaction. Store associates who understand a product’s origins and materials—and communicate that story to customers—can unlock the premium many consumers will pay for products that are domestically produced, environmentally friendly or socially responsible.
But the demands on today’s store associates go beyond answering product questions. The most valuable retail employees understand how social media and other influences shape consumers’ tastes and preferences. For example, a shopper visiting a fashion retailer may reference a celebrity’s outfit they saw online. A perceptive sales associate can curate several pieces of clothing from the store to help the customer create a similar look.
Employees also create a differentiated consumer experience when they use technology to remove points of friction for shoppers: price-matching an in-store product to the online price, for example, or ordering an out-of-stock in-store product from a warehouse for delivery to the customer’s home.
Companies can also increase employee engagement through rapid onboarding and by equipping staff with productivity-enhancing tools that modernize inventory locations, cycle counting, backroom receiving and service department performance. These help businesses adapt to a tight labour market and higher staff turnover, including the loss of long-tenured employees with in-depth knowledge of your operations.
The more hurdles consumers encounter when getting the products they want into their hands, the more likely they are to seek alternatives. More than a third (34%) of Canadian consumers say they frequently respond to these disruptions by shopping at multiple retailers. A similar number (32%) buy retailers’ store brands as a substitute. And 28% use comparison sites to look for availability. Canadian consumers are also clear on their unwillingness to spend more on alternatives. Only 13% say they frequently pay for pricier substitutes—notably less than in the US (25%) and globally (24%).
This threatens established relationships between brands and their customers. But it also creates new opportunities for companies that mitigate these supply chain challenges. We already see many retailers and consumer goods companies reimagining their supplier and distribution networks. In our recent CEO Survey, 49% of Canadian consumer markets CEOs told us they plan to adjust their company’s supply chains in 2023.
In some cases, this means diversifying suppliers, nearshoring and establishing regional manufacturing operations. Leading companies use data and analytics capabilities to inform these decisions. These tools give them a clearer view of where their components and products originate and let companies run more sophisticated scenario analyses. We also see businesses turning to automation technologies to accelerate their internal distribution network, remove variability and address a progressively tighter labour market.
Businesses that successfully implement data, analytics and automation capabilities into their supply and distribution networks can reduce their cost structure. They also have an opportunity to grow their market share: one in five Canadian consumers says they expect to increase their spending over the next six months with retailers that provide an efficient delivery service.
For retailers and consumer goods companies, capturing a share of this growing market requires more than mobile-friendly e-commerce features. It takes a reimagination of how consumers use technology across multiple channels—sometimes simultaneously—to interact with your brand.
One channel we’re watching closely is the metaverse: immersive virtual worlds accessible through different platforms that let users socialize, work, play games and buy digital and tangible objects. Globally, it’s still in the early stages of adoption, with only 26% of consumers using the metaverse. That figure is even lower in Canada, at 12%.
Similarly, few companies see the metaverse as a priority. In our recent CEO Survey, only 5% of Canadian consumer markets respondents said they planned to invest in metaverse initiatives this year. That’s slightly below the global average of 9%. The metaverse isn’t ready for the limelight—yet. But we already see some retailers and consumer goods companies using creative techniques to create value in the metaverse.
Luxury fashion brands are among the notable early adopters. Some are applying gamification techniques to exhibit their collections in new ways, engage younger audiences and sell both digital designs and physical products in the metaverse. This includes creating games in which players select and customize the company’s apparel for their character to wear as they complete activities and compete to win digital and physical items. Brands are also creating their own immersive spaces in digital worlds for visitors to walk through and learn more about the company as well as view, try on and purchase digital products.
Our colleagues in the US found that leading companies align their metaverse efforts to specific and measurable outcomes, such as brand building and customer engagement. They’re also maintaining their initiatives with testing and performance monitoring. But we believe the success of metaverse ventures rests on a factor more important than functionality: trust.
One-quarter of Canadian consumers say they’re highly concerned about the privacy of their personal data when engaging retailers and consumer goods companies. That puts the sector in an enviable position. By contrast, 43% say they’re highly concerned about their data when interacting with social media companies. One possible reason for the discrepancy is that consumers often see a return on providing data to retailers in the form of vouchers, discounts and special offers.
But a single high-profile incident is enough to destroy consumers’ trust. And consumers are already acting on their data privacy concerns. More than half (51%) of those who are concerned about the privacy of their personal information don’t share more data than required. And 34% say they’ll cut off communication by opting out of email and text messaging. Farther down the list, but potentially more serious, 19% say they’ll reduce their spending with a company when they’re skeptical their data is being protected.
Companies that take an integrated approach to data privacy gain a better understanding of their customers’ wants, needs and behaviours while also safeguarding personal information. A formalized program for generating, protecting, governing and disposing of data lets you handle information securely—helping you comply with evolving regulations and protecting your reputation—while also mining it for insights.
We’ve seen powerful outcomes when businesses combine this data trust approach with opt-in loyalty programs. It’s an effective way of transparently personalizing offers to consumers and helps avoid the consumer wariness and regulatory risks of more opaque data collection methods. This mutually beneficial model of gaining privileged insights helps retail and consumer goods companies sustain their most important customer relationships.
You can help make your vision a reality by starting with a clear concept of the consumer and employee experiences you want to create, as well as an understanding of how to implement the right technology solutions. This human-led and technology-powered approach lets companies meet consumers’ needs today while also earning their sustained trust and loyalty.”
This article is excerpted from pwc.com website, published March 2023