Canadian Retailer - Summer 2014 - 24

ECONOMIC OUTLOOK

impulse to save is influenced by a weak Canadian dollar and rising gas and utility prices
and will likely continue as inflation and rising transportation costs pressure consumers
to find savings.
"Canadians are focused on finding the best
bang for buck and we're willing to switch retailers and spend more of our dollars in those
retailers because more of us want to save
money," says Allison.
Bulk buying

Bulk-buying, especially groceries, is a continuing trend.

Another trend that Allison expects to continue through 2014 is a propensity among
consumers to make their purchases on promotions. Prior to the recession, the percentage
of goods purchased on promotion was 27 per
cent. In Q1 2014, that numbered hovered at 37
per cent-the same place it hovered in 2013,
one of the worst years in history for retail.
Reducing expenditures is the motive for
most consumers today. Six out of ten consumers say they changed their spending
habits to save on household expenses. This

Canadians are buying in bulk, yet another
way that clipped consumer confidence is
driving consumer spending. One of the major winners, according to Nielsen's consumer
surveys, has been Costco, which has seen
an average transaction of $120, compared to
about $40 at the average retailer.
The consumer's mantra is, "The more I
buy, the more I save."
"That's why a retailer like Costco has been
growing in share, seeing their trips increase,
and also their basket sizes continue to outperform other retail channels," explains Allison.
He points to a new phenomenon in grocery
shopping as evidence of the shift in behaviour among budget-conscious consumers.
This new phenomenon-a willingness to purchase milk at a warehouse club like Costco-
is something that didn't use to happen. In Q1
2014, 25 per cent of all Canadians went to a
warehouse club to buy milk, the number one
category in consumer packaged goods. They
didn't just buy one 2-litre bag, either. They
bought two 2-litre bags.
"We're willing to take that trip to Costco to
buy milk now," says Allison. "We're stocking
up when we buy milk."

CANADIANS LOVE INDIES

One asset independents can leverage to help get them
through a period of low consumer confidence is the affection many consumers have for local retailers. According
to new research by LoyaltyOne and RCC, even though
large retail chains win the largest portion of every dollar
spent in retail in Canada, independent retailers claim
27 per cent, garnering these stores a greater spend than
large e-commerce retailers. Independents also benefit
from a strong connection with their shoppers, with 66
per cent of consumers visiting an independent retailer a
few times a month or every two to three weeks.
The research identifies four strategies for how independent retailers can deepen relationships with customers:
1. Prioritize personalization because personalized service
is the reason many consumers shop at independents;

24 |

2. Cultivate an inventory that is focused on quality
and uniqueness, not quantity;
3. Become adept at social media because the research
shows that customers who socialize electronically tend to be the same people who advocate for
independent retailing; and
4. Stay local, which means making every sale, whether inperson or online, feel close in proximity to the customer.
The research also revealed a major weakness in
the businesses of independent retailers-most have
no electronic checkout. Only 34 per cent of Canadian
independents have a web store, meaning that a huge
proportion of Canadian retailers do not compete in a
growing area of the market.

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Canadian Retailer - Summer 2014

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