On the business side, business sentiment has also continued to recover with key drivers such as employment, and investment intentions experiencing the most significant increases since fall 2020. Continuation of government relief programs, strengthening foreign demand and growing confidence as the government distributes vaccines are additional contributing factors.2
While certain sectors continue to struggle, mostly those in high-contact and non-essential services, many brands have adapted well to the COVID-19 pandemic by leveraging trends such as the adoption of digital technologies.
For instance, a large Canadian food retailer expanded its online shopping and home delivery service, using robots to assemble orders to reduce manual efforts and expanding its reach by bringing products to customers’ homes. Similarly, one of Canada’s largest athletic apparel retailers grew by 22%, investing heavily in integrating online and store operations to provide a seamless shopping experience.3
Looking back, looking ahead: learnings from the holiday season
In the third edition of EY’s Canadian Future Consumer Index, we introduced five imperatives for the holiday season:
- Is your digital store as resilient as your physical store?
- How will your products make it to your customers?
- Who will be spending at home?
- What products are consumers looking for this year?
- Are you prepared for in-person shopping?
The results from the Canadian holiday season sales are in. A report from Salesforce indicated that holiday shopping revenue grew by 70% in e-commerce compared to the prior year. Boxing Day online shopping traffic alone grew by 2,170% with Canadian shoppers spending an average of $366 on online orders compared to an average of $100 during Black Friday and Cyber Monday sales. Nearly two-thirds (63%) of Canadians completed their transactions through their mobile devices.4
Results from the holiday season highlight a trend that is likely to remain in the new normal – people turning to digital channels are perceiving new value through ease of access, convenience and safety.
Some retail companies are also reaping the benefits of these accelerated trends. The consumption shift to the home, together with the increased importance of health and hygiene, has boosted growth and profits for retailers that have adapted by expanding their online presence. They’ve changed much faster than anyone thought possible: 84% of consumer companies conducted a comprehensive strategic and portfolio review in 2020.
While many retailers adapted to serve the consumer of today, they will need to continue adapting to serve the consumer of tomorrow. How can retailers learn from their recent experiences to accelerate the transformation of their business and get ahead of emerging consumer needs? It won’t be easy. It will require going beyond making the current portfolio more affordable, demonstrating the benefits of their products, innovating incrementally and experimenting with direct-to-consumer channels. Brands must be bolder about meeting the needs and expectations of the changing consumer.
The consumer in the new normal
The COVID-19 crisis is continuing to have a transformative impact on the lives of consumers. While the boom in at-home consumption is unlikely to sustain at the current levels, other consumer changes will only accelerate.
Before the holiday season, 30% of consumers surveyed in Canada said they would be purchasing online, with technology (54%), apparel (33%) and cosmetics (31%) being the most popular product categories. Considerably less likely to generate online shopping interest were food and beverage categories, such as fresh food (9%), alcoholic beverages (10%), non-alcoholic beverages (10%) and packaged food (14%).
These shifts in consumer preferences make it increasingly important for brands to understand their customers and their journey in relationship to their product lines. They also reinforce the need for building an online strategy that aligns the organization’s desired outcomes with the consumer’s desired experience.
The viability of vaccines has added a new layer of complexity to consumer sentiment given the race against the clock to beat the new variants of the virus that are emerging. That said, even as some ideas remained unchanged over the past few months, other concerns have become more pronounced. For instance, four months further into the pandemic, the percentage of Canadians surveyed who think they will live in fear of COVID-19 for at least another year has risen slightly, from 40% to 42%.
At the same time, people are increasingly concerned about the health of their family, access to necessities, personal finances and basic freedoms. This differs around the world.