Believe it or not, the most recent recession was remarkably short in Canada. It began five years ago, in November 2008. But six months later, in May 2009, it was officially done.
Yet the recession haunts us still. Today, 47% of Canadians feel like they’re in a recession. This sense of malaise is profoundly affecting shopping behaviour.
But here’s good news: Retailers and CPGs who understand the change can take advantage of it and win the day in their stores. Before I tell you how, let me walk you through what’s happening in shopperland.
At Nielsen, we recently analyzed $122 billion worth of Canadian consumer transactions to understand how consumers are buying. The analysis looked at year-over-year growth rates for a three-year period.
Although we found that spending intentions are up among Canadians, we also found shopping trips per household are flat or declining.
It makes sense that in hard times people shop less often. But as I said, Canada’s economy is no longer in a recession. The opposite is true. Consumer confidence is up and financial trends are improving. Yet consumers are still visiting stores less often than before the recession.
Let’s look at the numbers:
In 2008, Canadians averaged 206 shopping trips. Five years later, they’re making only 174, a loss of 32 trips a year. During the past year alone, the number of shopping trips declined by 3%.
The drop in overall shopping can be pinned primarily to the key CPG channels. Grocery stores, drugstores and mass merchandisers are struggling to maintain traffic. Shopping trips are down 3% for grocery, 2.3% at drug and 2.4% at mass.
On the other hand, warehouse clubs, dollar stores and online are capturing more trips (up 1.7%, 4.5% and 1.2% respectively). That shouldn’t come as a surprise. Today’s consumers are interested in convenience and value. These channels deliver on both those promises.
At face value, a decrease in shopping trips sounds bad for grocery stores and CPGs. But wait! There’s a silver lining in the data. The amount of money Canadians are spending per trip is actually going up! That’s a critical point.
Higher spend per trip places greater importance on each transaction and interaction with the consumer.
In Canada, households are spending 8% more per trip these days than just a few years ago. Therefore, consumers are looking to spend, but retailers have fewer opportunities to interact with them.
Retailers need to become more strategic in how they target Canadians. To accomplish that goal they must first understand how consumers have changed since the recession.
Two words seem capable of summing up the shift: lifestyle and technology. Let me touch on lifestyle first.
Today’s consumers are looking for balance in their lives. Yes, they’re worried about the economy, but they are also looking for some semblance of work/life balance.
More than 80% of Canadians say spending quality time with family and friends matters most to them now. In other words, they are looking for ways to slow down their hectic lives.
Then there’s technology, which is speeding life up but also putting consumers in closer contact with an ever-expanding realm of shopping opportunity. More than 40% of Canadians owned a smartphone last year and that number is going up.
Many don’t think Canadians do a lot of shopping online. But they are starting. Today, 32% buy CPG products online (Nielsen Total Tracked Retail Sales).
E-commerce has 1.3% share of consumer goods retail, or about $1.6 billion. Of households that buy online, 37% have bought food and 40% health and beauty.
So how can retailers and CPGs capitalize on the post-recession consumer? In a nutshell, bring the store to the consumer and engage with them wherever they are across the purchase cycle. The before-, during- and after-buying periods have never been more important.
Advertising, blogs, social media and word-of-mouth are critical tools in the ramp up. In-store displays, coupons, sampling and shelf-talkers continue momentum once a product is in-market.
But it doesn’t end there. Social media, customer relationship management, text messages and on-pack coupons are great ways to engage after consumers have left the register.
With Canadians spending 8% more per trip, there’s money on the table. Recession or not.
Carman Allison is vice-president of consumer insights at Nielsen in Toronto ca.nielsen.com