Back-to-school spending to increase 4.5 % in Canada
Generation Z is the new big disruptor in the retail industry, EY says
(Montreal, 20 July 2016) Back-to-school spending in Canada this year is set to increase 4.5% over last year, according to EY. Retailers will win their share of the spending pie by targeting not only parents who want to set their children up for success, but also Gen Z – the teens and tweens who are the first true digital natives.
“Canadian retail sales are off to a strong start in 2016, and we expect the trend to continue through the critical back-to-school season”, says Daniel Baer, EY partner and National Retail and Consumer Products Leader. “Year over year lower gas prices, a stable but low Canadian dollar, some price inflation, and enhanced Canada Child Benefits are expected to drive back to school spending in most, but not all, parts of the country”.
The back-to-school sales forecast varies by region. British Columbia will continue to lead retail sales, with strong results expected in Ontario as well. Sales in Quebec and the Atlantic provinces are expected to be in line with the national average, while the Prairies are expected to be below the national average. Alberta sales are not expected to grow.
Economic factors are not the only ones influencing back-to-school sales. Gen Z’s growing buying power is changing the game across the board.
According to a recent EY report, One tough customer: How Gen Z is challenging the competitive landscape and redefining omnichannel, the teens and tweens of Gen Z are driven, innovative and goal-oriented. They live online, and aren’t afraid to share their opinions – and they demand similar transparency from the businesses they buy from.
“Retailers have always had to be responsive to what the customer wants,” says Baer. “What has changed, though, is how, where and when they interact with them. Retailers need to realize that this demographic has different attention spans, different desires, and different outlooks on the world. Consumers today also crave experiences and solutions over products.”
For retailers, back-to-school season provides the perfect opportunity to engage the younger generation, and capture new consumers.
While parents will generally still call the shots around things like supplies, Gen Z’s influence on clothing and shoe purchases is set to increase.
Baer reminds retailers to invest in social media and mobile strategies: “Canadian retailers are still lagging foreign retailers around digital. But with a significant percentage of Canadian retail sales still made through foreign owned retailers, there’s a real opportunity to catch up on that front”.
Knowing that Gen Z lives out loud, Baer says having a platform for two-way communication is a must: “Younger generations don’t trust advertising; they trust their friends and what they read online in blogs and peer reviews.”
How can retailers get in front of consumers to engage them today?
In store. Online. On mobile. They’re all important. Today, smartphones are the #1 source of information for consumers, but physical stores remain the foundation. To truly engage with customers, retailers don’t need new channels – they need new touch points.
“It’s no longer about a channel strategy, but rather a customer strategy with a fully integrated approach,” explains Baer. “Consumers, parents and children alike are doing their homework before they buy. They may not buy online or via mobile, but it’s the first place they’ll go to do their research. Retailers must deliver responsively, intuitively and seamlessly across all platforms.”
Other highlights of EY’s retail trends forecast include:
- The speed of change and innovation will continue to accelerate.
- With an increasing number of Canadians using social platforms such as Instagram and Pinterest, the digital experience is quickly moving from words to images.
- The lower Canadian dollar will help keep sales on this side of the border.
- Free shipping and delivery, as well as flexible return policies continue to be important for parents and Gen Z.
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