The retail landscape of the future

Canadian Consumer Insights 2021, Pulse 1

At a glance

  • Online shopping habits and behaviours are here to stay, so organizations need to prioritize their long-term digital strategic plan now.

  • To respond to ever-increasing customer expectations, it will be critical to optimize the omnichannel retail experience, supply chains, logistics and distribution.

  • The pandemic has heightened awareness of environmental and social issues. Going forward, customers will seek out organizations that align to their values.

As vaccination campaigns gain momentum, consumers and retailers are beginning to look beyond the pandemic. While some aspects of life may go back to normal, other trends that have emerged and strengthened over the last year will persist.

Responses to our most recent customer survey are in line with global and Canadian responses from six months ago—and even from 12 months ago—showing consumers are still concerned about the pandemic and its long-term economic and social impacts. They’re continuing to shop online in greater numbers than ever before, citing price, convenience, and health and safety concerns as the predominant reasons.

And their general shopping behaviours continue to change. For example, when considering their shopping habits online and in-store, more than half (52%) of respondents agree they’re making less frequent but bigger basket shops, putting a pause on the previously popular microtrips. And while 41% have been buying more from local independent retailers, 38% have been shopping more with large retailers.

We’re in a period of significant upheaval. Consumer-facing companies will need to be agile and respond quickly to change to be successful in this dynamic environment.

To track these rapidly evolving consumer behaviours, we’re conducting two Consumer Insights Pulse surveys this year. Read our analysis of our first Pulse survey results and explore key actions retailers need to take now.

%

of respondents are making less frequent but bigger basket shops

Explore the retail landscape of the future

“There’s a tremendous amount of stimulus out there—money sitting in people’s bank accounts and pent-up demand. This wasn’t a cyclical recession or a financial crisis, but rather, mandated shutdowns, so demand is there, and it will come roaring back.”

Myles Gooding, National Consumer Markets Leader & Global Consumer Markets Advisory Leader, PwC Canada

Reinvent business models

In the last few months, we’ve already seen some forward-looking organizations reinvent their business models and unearth new opportunities in response to changing consumer behaviours.

More than half of Canadian respondents say they’re shopping less or not at all in-store for fashion (55%) and consumer electronics (54%). But consumers continue to shop in stores for groceries—39% of shoppers aren’t buying groceries online at all—so spaces where groceries are sold continue to be valuable commodities, while we expect less value to be placed on other retail space.

As we start to see some of the long-term effects of extended closures and losses in consumer confidence, many organizations will be adopting strategies to optimize their operations. Those larger businesses that have done well throughout the pandemic have cash to spend and will be looking at acquisitions, either to grow their core business or to diversify their portfolio to pivot their brand. Much of the mid-tier retailer sector went through restructuring early in the pandemic.

As we progress further into 2021, restructuring will continue in the independent retail subsector, with some exiting, others becoming re-energized through mergers and acquisitions (M&A) and new ones taking advantage of evolving consumer trends, low interest rates and general industry shakeup.

%

of respondents say they’re shopping less or not at all in-store for fashion

Our insight

As organizations restructure and move forward, they’ll need to understand what truly differentiates them from their competitors—and how to deliver on that. Winners will be those that understand how to make the digital experience seamless with the physical. They’ll be those that develop alternative ways of fulfilling customer needs and take advantage of quickly changing customer preferences and behaviours.

Here are some steps retailers should take to gain a competitive edge:

  • Prioritize resilience. Build operational and financial resilience into your business models to avoid becoming obsolete, distressed or potential targets of takeovers.
  • Broaden your horizons. Diversify your supply chains, expand your market share and acquire new channels through M&A.

Evolve in tandem with customer expectations

In the face of ongoing uncertainty, it’s imperative for Canadian organizations to focus on their core strategic capabilities, optimize and enhance revenue streams and reorganize for growth.

Customers are demanding an ever-increasing level of service, including lower prices and faster response times. When it comes to online shopping, Canadian respondents highlighted the importance of in-stock availability (62%), fast/reliable delivery (61%) and a good return policy (54%), making those the top three consumer concerns. Retailer memberships and next-generation loyalty programs that offer free shipping or guaranteed shipping times are increasingly becoming what consumers expect as a matter of course, and this is a trend that’s likely to continue.

Top consumer concerns: Key attributes of online shopping 

Infographic: 62% = In-stock availability, 61% = Fast/reliable delivery, 54% = Good return policy

Our insight

We know digital transformation is a priority for CEOs. In fact, in our recent Annual Global CEO Survey, we found that 45% of North American respondents plan to significantly increase long-term investments in digital transformation initiatives over the next three years. But what will this look like in the retail sector?

To create a seamless omnichannel customer experience, retailers will need to consider how they’re building out their e-commerce strategy and platform. They’ll need to integrate their approach to provide shoppers with a safe, unified experience across touchpoints. And they’ll need to rethink their operations and invest in their supply chains.

Some companies are investing in new fulfillment components to become more agile. Examples include micro-fulfillment centres, which are modular, automated distribution hubs that can be used to fill orders as part of a last-mile delivery solution, as well as even larger-format customer fulfillment centres.

Here are some steps retailers should take to gain a competitive edge:

  • Rethink operations. Consider your customer’s experience after they check out from their online cart. Your operations strategy needs to be clear, responsive and agile.
  • Invest in your supply chain. Make major investments in your logistics, automated distribution, micro-fulfillment and customer fulfillment strategies to make sure you don’t get left behind.
  • Navigate the data lake. Ensure your data and information flow is seamless and secure to optimize your supply chain.

%

of Canadian respondents say they’re extremely or somewhat concerned about how their data is being used when shopping online.

Appeal to the eco-conscious consumer

Sustainability is a growing concern when it comes to consumer shopping. Nearly half of Canadian survey respondents agree they’re buying from companies that are conscious and supportive of protecting the environment (49%), and respondents are intentionally buying items with eco-friendly/less packaging (46%).

14% intentionally buy items with eco-friendly or less packaging, 11%  choose products with a traceable and transparent origin, 13% include more plant-based foods in my diet due to sustainability principles, 13% buy from companies that are supportive of protecting the environment, 12% more biodegradable/eco-friendly products

Today’s consumers want products that aren’t just eco-friendly, but also cruelty-free and free of forced labour, among other ethical considerations. Some companies are looking to deploy blockchain to track and get full transparency into their supply chains to confirm their goods are conflict-free. Digital tools such as QR codes on products can then help retailers share their story with customers.


When it comes to fashion purchases:

%

of respondents would be willing to pay more for brands well known for their ethical practices

%

of respondents would pay more for locally produced/sourced groceries

Yet for many people, it’s not just about the product and sourcing, but also about the organization as a whole. Consumers want to know their dollars are going toward retailers that are committed to and able to report on being environmentally sustainable and socially conscious.

Our insight

Canadian consumers are likely to consider the effects of their purchases on the environment going forward. But environmental, social and governance (ESG) issues extend beyond consumer expectations. Shareholders and governments are increasingly making ESG initiatives a must-have—rather than a nice-to-have—so embracing sustainability initiatives will be essential to long-term value creation.

Here are some steps retailers should take to gain a competitive edge:

  • Take first-mover advantage. Adapt and incorporate good practices early to get ahead of those who wait until government mandates or shareholder values dictate change.
  • Embed ESG. Make ESG goals and ideals an integral part of your organization’s corporate culture and real daily operating behaviours. And make sure you have measurement and reporting mechanisms in place.
  • Make visibility a priority. Increase transparency in your supply chain to create greater accountability and sustainability.

It’s clear: consumer behaviours and expectations are shifting dramatically. To be successful, consumer-facing companies will need to be agile.

Don’t let the moment pass you by—move quickly to take advantage of new opportunities in the retail landscape of the future.

Contact us

Myles Gooding

Myles Gooding

National Consumer Markets Leader & Global Consumer Markets Advisory Leader, PwC Canada

Tel: +1 416 687 8598

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