According to a new research report released today by the Business Development Bank of Canada (BDC), five consumer trends will have a permanent impact on Canadians' buying habits and create growth opportunities for small and medium-sized enterprises (SMEs).
The report identifies five consumer behaviours—the buy-local movement, rising health awareness, frugality, mass customization of goods and the impact of the Internet—that have emerged as a result of advances in technology, changing demographics and the 2007-08 recession.
"These consumer trends have created rich business opportunities, which entrepreneurs must seize on if they want to grow their businesses," said Pierre Cléroux, Chief Economist, BDC.
However, the research shows that entrepreneurs have not embraced all trends equally. Some SMEs have begun catering to the increased demand for healthy, well-priced local products, for instance, but e-commerce has been slower to catch on. In fact, the Canadian online retail presence remains largely underdeveloped and, as a result, e-commerce has lagged behind that of most other nations, with some of the lowest penetration levels in the developed world.
"Regardless of whether they buy a product over the Internet or in a store, more consumers are influenced by what they see on online channels," said Mr. Cléroux. "Entrepreneurs must realize that a simple website is no longer sufficient for businesses. Instead, they need to adopt a multi-channel approach."
The "Made in Canada" advantage
Of all the consumer trends, the buy-local movement has been the most powerful. Close to two-thirds of Canadians say they have made an effort to buy local or Canadian-made products in the past year, and two in five consider local production an important factor in their buying decision.
"The 'Made in Canada' brand is powerful because Canadians have clear understanding of what buying locally made products means to the national economy," added Mr. Cléroux.
The research shows that consumers who buy local do so for economic reasons: 97% of Canadians do it to support the local economy, 96% do it to support local farmers and 93% do it to create local jobs, while 87% think it is better for the environment.
Quebecers and Atlantic Canadians are the most faithful users of locally made products, with roughly three-quarters indicating they recently bought products made in Canada; consumers in Saskatchewan and Manitoba are the least likely to do so.
BDC's study also found:
- Half of Canadians consider the health impact of a product when making purchasing decisions and one-third are willing to pay a premium for healthy products.
- Mass customization has emerged as the go-to technique for delivering tailor-made products and services to customers at prices and lead times that match those of mass-produced products.
- The Internet is much more than an online purchasing tool; it is now embedded throughout most product purchasing journeys.
- Seven out of 10 consumers have reduced their spending since the recession, and two-thirds consider the lowest possible cost the most influential factor in their purchasing decisions.
The recession also weakened consumer confidence, and low interest rates have spurred high debt levels.
"Consumers want personalized, high-quality products at reasonable prices and are using many penny-pinching strategies like group couponing to get more bang for their buck," said Mr. Cléroux.