No Match Found
Our latest Global Consumer Insights Survey shows Canadian shoppers performing a balancing act. On one hand, consumers want to get out and shop: 83% say their in-store shopping will rise or remain the same over the coming months. An even higher percentage (91%) say the same about online shopping.
But we also see Canadians shifting their shopping priorities and making cautious spending plans. Consumers collectively expect only small net spending increases in most discretionary product categories.
With this discerning outlook in mind, we examined several influences affecting consumers’ purchasing decisions. We looked at how technology is reshaping the ways in which consumers research products, interact with brands and try new shopping models.
Our report draws on insights from our spring 2023 survey of more than 500 Canadian consumers and thousands more around the world. The results show how retailers and consumer goods companies can remove points of friction to create a seamless consumer decision journey—from search to consideration to purchase and, ultimately, retention.
We created distinct personas from our data to illustrate three of the main trends seen in our survey results. We also aggregated data from all respondents for comparison purposes.
Consumers who buy the latest tech as soon as it’s available or before their peers.
Consumers who expect to spend more on luxury clothing or products in the next six months.
Consumers with two or more shopping subscriptions across different product categories.
All survey respondents.
Our survey examined the digital influences on consumers’ purchasing decisions. Asked to rank their top sources of pre-purchase information, Canadian consumers cited search engines (60%), Amazon (48%) and retailers’ websites (40%) in higher numbers than their global peers (see chart).
Interestingly, Canadian consumers are less likely to research products on social media. Just 23% ranked it among their top three responses, compared to 31% globally. But that difference disappears among the youngest respondents in our survey: Canadian Gen Z consumers are more likely to research products on social media than their peers in other countries (45%, compared to 43% globally and 40% in the US).
These results show the importance of search engine optimization, informative websites and social media marketing in removing friction from a consumer's pre-purchase journey. But effectively using these platforms to attract and retain customers requires a deep understanding of your consumer, including their personal shopping habits and purchasing preferences.
This imperative also appears elsewhere in our survey. When asked about influential forms of advertising, consumers were most likely to cite ads that link them directly to offers and promotions from their favourite brands and products. More than a third (35%) of Canadian respondents mentioned this marketing tactic, consistent with consumers globally (37%). But Canadian shoppers were more likely than their global peers to say they’re influenced by personalized email advertisements (28%, versus 21%).
Retailers and consumer goods companies that combine customer data, analytics technology and industry insights develop a powerful understanding of their customers that goes beyond socio-demographic characteristics. This lets you reach consumers with greater precision and provide personalized information that helps them make purchasing decisions.
Our survey also asked consumers about the technology they use to research products. Unsurprisingly, younger consumers are most likely to use new tech-enabled research methods (see chart).
We believe usage will climb amid advances in generative artificial intelligence (AI). This technology has the potential to change many aspects of how brands interact with consumers. Chatbots are one specific area we explored in our survey. Chatbots are already moving beyond rules-based functionality, such as regurgitating responses to a list of frequently asked questions to answer a shopper’s text-based query. They’re now capable of removing friction from consumers’ pre-purchase research by handling more complex and personalized questions, such as a shopper asking for a detailed comparison of two products they’ve selected.
Generative AI is accelerating the pace at which chatbots and other technologies are evolving beyond what we’ve ever seen before. But it’s important to recognize that consumers adopt technologies at different rates. While 35% of our respondents say they try the latest technology as soon as it’s available or before their peers, a comparable number (27%) only adopt new technologies when necessary (or not at all).
As you roll out new technologies, such as generative AI and chatbots, you have opportunities to build trust with consumers by meeting them at their most-comfortable starting point. When we asked consumers what chatbot functionality appeals to them the most, searching for product information before making a purchase (35%), customer service support (35%) and receiving updates about product deliveries and items coming back in stock (28%) topped the list.
Combining these functions with personalized marketing efforts amplifies the opportunities for retailers and consumer goods companies. If you understand what your customer wants to buy, you can recommend other relevant products and guide a shopper's purchasing journey.
Clearly, generative AI holds tremendous potential for the retail industry. Chatbots are but one application. As you evaluate various opportunities and build a generative AI strategy, it’s important to:
Our survey data contained a surprising finding: those consumers most likely to increase their spending on premium products and clothing don’t resemble traditional luxury shoppers. They’re relatively young (85% are under the age of 45), with somewhat modest earnings (80% have an annual household income of less than $100,000).
These upmarket consumers may not have the same budget as wealthier and more established luxury shoppers. But their desire to buy premium products to treat themselves, keep up with trends or simply own higher-quality items represents a potential growth area for retailers with upmarket offerings.
Against this backdrop, we looked at the factors that motivate consumers to buy premium products. Unsurprisingly, respondents commonly mentioned the exclusivity of premium brands, which was cited by 19% of consumers. But at the same time, 34% would spend more on premium products that are easier to purchase, such as through different channels.
That may seem counterintuitive at first, especially since many luxury retailers are focused on becoming more—not less—exclusive. But our data shows that upmarket consumers are trailblazers when it comes to engaging brands in new ways. They’re more likely than the average Canadian consumer to research products on social media (35% versus 23%) and use the metaverse (54% compared to 26% overall). Specifically, nearly a quarter (23%) purchased a product after testing it or browsing virtual stores in the metaverse, compared to 7% of all Canadian consumers. And 19% bought a physical luxury product after viewing it digitally in the metaverse (compared to 5% overall).
It’s not clear if the metaverse will live up to its hype. It has yet to catch hold with most Canadian consumers. But business activity in the metaverse is intensifying. PwC’s strategy+business publication recently explored how companies can create real-world value in the metaverse. Here’s where they suggest you start.
Dive in and explore: Assign at least one person or team to understand key metaverse concepts and the next generation of social media platforms.
Lay the foundation: Recruit digital-native employees already at home with the metaverse and integrate them with existing teams.
Make your play: Lower-risk opportunities include engaging consumers in new ways on social media, selling digital versions of physical goods and offering tours of virtual products. Leasing or buying digital real estate in the metaverse for advertising, sales or customer support are higher-risk gambles.
There’s another notable factor that motivates consumers to buy upmarket or luxury products: alignment with their environmental and social values, which 25% of all Canadian respondents cited.
Of course, environmental, social and governance (ESG) factors aren’t just issues for premium brands. They're important considerations for companies across the industry. A strong ESG performance can lower your cost of capital as well as help attract employees and customers who share your values. Our previous reports demonstrated this consumer demand for sustainably and ethically sourced products. This spring’s survey builds on those findings and shows most consumers are willing to pay a premium for environmental and social attributes (see chart).
But Canadian consumers as a whole have a lower tolerance for paying these above-average prices than their global peers. For example, only 19% of Canadian consumers—compared to 30% globally—would pay a premium of more than 10% for a low-carbon product. Upmarket shoppers are more likely to pay this premium. They’re most willing to pay more than 10% above the average price for products that are:
produced locally (cited by 44% of upmarket consumers versus 24% of all Canadian shoppers)
have a traceable or transparent origin (cited by 43% of upmarket consumers versus 19% of all Canadian shoppers)
biodegradable (cited by 41% of upmarket consumers versus 20% of all Canadian shoppers)
For retailers and consumer goods companies, these results highlight the value creation opportunities of ESG. New rules, such as Canada’s modern slavery regulations and ESG reporting requirements, already force companies to scrutinize their supply chain and environmental footprint. Acting on these insights by improving your ESG performance—and effectively communicating your sustainability story to consumers through labelling, packaging and online product descriptions—can differentiate your brand.
Selling through retailers is, and will continue to be, an important sales channel for consumer goods companies. But many of these businesses also covet the opportunity to sell straight to shoppers. It avoids the complexity of working with retailers and establishes a direct relationship with customers.
Consumers also see the appeal: 63% have purchased a product directly from a brand’s website. And there’s opportunity for growth. An additional 29% of respondents have considered buying straight from a brand, but haven’t yet made a purchase.
These Canadian results are consistent with our global findings. But the reasons Canadian consumers buy directly from brands are different. They’re motivated by better stock availability (a top-three response of 52% of Canadian consumers, compared to 43% globally) and more competitive prices (49% versus 43%).
Consumer goods companies looking at this direct-to-consumer opportunity often encounter questions of scale. Put simply, shipping a pallet of products to a retailer is logistically easier than sending individual products to customers.
Selling through subscriptions is one way to overcome this challenge. And we see room for subscription growth. Nearly a third (31%) of Canadian consumers buy at least one item through a subscription service. But for many of those products, the number of consumers planning to start a subscription is nearly double that of active subscribers.
Canadian consumers are most interested in subscribing to health and well-being products, such as supplements, with 18% saying they plan to start a subscription (on top of the 8% who subscribe now). That’s followed by household groceries such as fruit and vegetable boxes or meal kits, with 17% interested and 8% currently subscribing, and tea and coffee, with 15% interested and 8% currently subscribing.
These products share common attributes: they’re staple products that are consumed daily in the same quantity. This predictability makes a subscription more appealing for consumer goods companies and customers alike. We drilled down deeper and asked subscription shoppers why they use this service. Canadian consumers were more likely than their global peers to say it’s cost-effective (59%, versus 47%) or convenient (56%, versus 51%).
Paradoxically, the top reason Canadian consumers cancel subscriptions is that it’s too expensive, a perception cited by 51% of former subscribers. Nearly three in 10 (29%) also mentioned unexpected or increasing fees—something separate research shows has an outsized impact on consumer trust.
Consumers in our 2023 Trust Survey highlighted small and personal events, including a lack of transparency experienced through hidden fees, for example, as issues that erode their trust. By contrast, executives in our survey were more likely to focus on large-scale, headline-grabbing events such as security, legal or compliance issues. This disconnect underscores the importance for retail and consumer goods leaders to scrutinize their customers’ purchasing journey and pick out overlooked points of friction.
Shipping, processing and restocking returns are costly for retailers and consumer goods companies. We asked consumers what would reduce the number of online purchases they return.
More detailed product information and more accurate sizing were among the top responses of 52% and 50% of Canadian consumers, respectively. This is a tricky issue for apparel retailers as different designers have different interpretations of sizing. But other ways of reducing customer returns are more within companies’ control.
In particular, many businesses now charge customers for returns. This appears to work, particularly in Canada: 39% of consumers say it would reduce the number of returns they make, compared to 29% globally and 36% in the US.
Another trend we’re watching is the ability of consumers to see what they’re buying through immersive or interactive images of products. We’ve seen brands experiment with augmented reality by letting consumers upload their photos and measurements so they can virtually try on clothing, makeup and accessories. Only 23% of Canadian consumers say this would reduce their product returns. But that figure is higher in places where consumers are faster to adopt new technology, such as China and Hong Kong (35%).
Technology is changing consumers’ pre-purchase journeys. Companies that harness the power of AI, data analytics and consumer engagement platforms can create a frictionless retail experience that attracts and retains customers.
Combining these powerful technologies with business insights lets you give consumers the personalized product information they need to make purchasing decisions. This helps you build trust with consumers in ways that earns their sustained loyalty.
At PwC Canada, we’ve developed strategic Alliances with technology companies to help you better understand and engage your customers, differentiate your brand and find efficiencies by transforming your back-office and supply chain operations. Our approach focuses on bringing a human-led and technology-powered perspective to reinventing retail experiences.
Learn how we’re helping companies from different industries solve their most pressing business challenges through our strategic Alliances: