By: Andrea Baldwin, Partner at KPMG Canada
Online retail sales in Canada have been steadily gaining ground year over year, and are forecasted to reach 9 per cent of the country’s overall retail market by 2019. However, this growing shift in shopping behaviour is more than just another outlet to buy products and services. Our connected lifestyle is also transforming the way Canadian consumers are approaching their purchasing decisions. Social media and other online channels are driving consumer awareness, delivering promotional messages, influencing decision-making, and sharing experiences.
KPMG International’s Consumer Markets practice recently released a study, The truth about online consumers, which surveyed more than 18,000 consumers in over 50 countries – including over 500 in Canada. The study shares consumer insights on their latest online shopping experiences and expectations. It also discusses the techniques retailers can use to earn their business and loyalty. In a follow-up study, Canadian consumers are ready. Are you? more than 1,000 Canadian consumers discuss what they love about shopping online in their favourite categories and reinforced the message that Canadian retailers need to respond to changing expectations and desired experience.
Very attractive growth possibility
Canadian consumers continue to show lower rates of online adoption than global consumers across nearly every product category. However, when surveyed, over 80 per cent of Canadians confirmed that they bought something online in the previous three months with almost half (42%) say that they are shopping online more than they have in the past.
As retailers push for growth, this makes the online channel very attractive and this presents an opportunity for retailers (and/or brands) willing to make the online investment. It also represents a threat from global competitors who see opportunity in the Canadian market.
As both local retailers and global competitors improve their online offerings, we are starting to see Canadians explore new categories. In 13 of the 27 categories surveyed, Canadian respondents’ intent to purchase in the next 12 months increased by more than 10 per cent. The categories with the highest anticipated online growth rates in Canada are liquor (56%), wine (44%) and food/groceries (37%). These categories are traditionally underpenetrated compared to the strongest historical online performers: books and music, electronics, and women’s apparel.
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All generations are gravitating to online shopping
While online shopping in this country still lags in-store shopping by a wide margin, the imbalance could even out much more quickly as Millennials come into their prime spending years. Data shows that only 23 per cent of online consumers also visit stores for the shopping experience, pointing to lots of room for online sales growth. And there seems to be a little Millennial in all of us! The Gen X-ers (born between 1966 and 1981) is actually the most active for online shopping, transacting 20 per cent more than online than Millennials. Baby Boomers (born between 1946 and 1965) also shopped online as often as Millennials and, on average, spent more per transaction.
Segments of all generations are gravitating to online shopping for perceptions of convenience, value and options. More than ever, retailers need to make the best strategic choices about where to invest precious capital in the customer experience journey. The ‘right’ strategy depends on a retailer’s target customer and the need for that customer’s peak experience to cross over from in-store merchandising to online presentation.
Customers deliver important messages
How can retail companies anticipate shopping preferences and behaviours? Here are some more insights from the surveys:
Online channels are key to building awareness: Three of the top five sources of information leading to purchase were online, with 24 per cent logging into online shops directly – which is more than twice as many as those who gathered information in-store. More Canadians now go directly to an e-commerce website (89%) than start with a search engine (69%). Popular platforms like Apple, Google, Facebook and Amazon are increasingly influencing consumers’ paths to purchase.
Price continues to be the first consideration: Price was the primary consideration for an online purchase cited by 37 per cent of Canadians, more than twice as important as brand attributes and product features (both 18%). Almost half of Canadians (44%) also see free shipping as a major benefit, and nearly 70 per cent of Canadians paid no shipping on their last purchase. One in two Canadians also wants returns to be just as easy.
Growth in online conversion is expected across categories: For Canadians who purchased online in the past year, 56 per cent did so for 24/7 access to products, 48% took advantage of better pricing, 37 per cent appreciated the convenience, and 27 per cent perceived better selection.
Post purchase evaluations are becoming the norm: Not only do 14 per cent of Canadian consumers rely on online reviews to help make online purchase decisions, but 25 per cent also post online reviews after purchase. Social media outlets Facebook, Pinterest and Instagram are the top three sources for post-purchase feedback. For example, almost a fifth of Canadian consumers say Facebook plays a role in their online purchase decisions.
Consumers have many options, so expectations are high and competition is strong. Fortunately, target customers also have preferences they are very willing to share. Can retailers handle the truth? By listening to customers and really understanding what they want, Canadian retailers can win their loyalty.
Andrea Baldwin leads the Consumer Markets Management Consulting practice for KPMG in Canada.
To download your free PDF copies of The truth about online consumers and Canadian consumers are ready, are you? visit https://home.kpmg.com/ca/en/home/insights/2017/03/the-truth-about-online-consumers.html