Black Friday / Cyber Monday will test how well Canadian retailers pivoted to the new COVID-19 reality: KPMG in Canada report

Personal health and safety joins value for money and ease of buying as the pandemic upends consumer shopping habits

TORONTO, Nov. 27, 2020 /CNW/ - When it comes to shopping, Canadians now ask 'is it safe?' rather than is it convenient, cheap, or trendy? The realities of the COVID-19 pandemic have made Canadians rethink how, when, and where they shop, with in-store visits to all but grocers and big box stores declining sharply, finds the Keeping up with the Canadian consumer report from KPMG in Canada.

The report, which combines insights from two KPMG International consumer surveys, explores the impact of the pandemic on consumer needs, behaviours, and preferences in general, and then specifically identifies trends in the grocery / restaurant and non-grocery retail sectors.

"The only way sales at bricks-and-mortar retailers can return to historical highs is when the pandemic is under control and consumers feel safe again," says Kostya Polyakov, partner and national industry leader, consumer and retail, KPMG in Canada. "Until then, the question retailers need to ask themselves is, 'have I done enough to pivot online to ensure that Black Friday / Cyber Monday, the busiest shopping weekend of the year, will carry me through the lockdown restrictions and into the new year?"

Already, two in five Canadians are spending less on non-essential items, a trend that's likely to continue. The report finds that Canadians plan to spend 34 per cent less on non-grocery items in the next six-to-12 months, signalling a possible decline in revenue opportunities.

"But, relief may come from a previously overlooked demographic – Baby Boomers," says Peter Hughes, partner and national leader, customer practice, KPMG in Canada. "For a decade now, online marketing has catered to Millennials and Gen Zs, but retailers now have a unique opportunity to capture a new and growing market segment."

With two-thirds of Canadians increasing their online shopping habits during COVID-19, KPMG research shows that the migration of Baby Boomers to online shopping presents an untapped potential for online retailers, especially when combined with data that indicates this demographic feels the most financially secure. Currently, 54 per cent of Canadians aged 55+ say they are using online shopping services of large non-grocery retailers more often than in the past, and 49 per cent say the same of online shopping hubs.

The research, moreover, indicates they will continue to shop online even when conditions return to normal.

Key Findings:

• The primary decision-making factor among Canadian shoppers is their personal and family health and safety, with 80 per cent saying it is "much more" or "bit more" important consideration when shopping. This joins value for money and ease of buying as the top considerations.
• 29 per cent who plan to return to their pre-COVID shopping habits said they will continue to practice social distancing, mask wearing, and other precautionary measures like hand washing.
• 66 per cent of Canadians increased their online shopping habits during COVID-19.
• 47 per cent say the pandemic has made them much or slightly worse off financially; 40 per cent have been unaffected; and, 10 per cent are slightly or much better off.
• 40 per cent are spending less on non-essential items
• 44 per cent are taking a more selective approach to their purchases, and 20 per cent have stopped all non-essential and luxury purchases altogether
• Canadians plan to spend 34 per cent less on non-grocery items over the next six-to-12 months

The focus on personal safety has resulted in sharp declines in visits to physical locations, although supermarkets and grocers and pharmacies have as expected weathered the pandemic better, they have also seen a 9 per cent decline in in-store visits.

	Change in In-Store Visits
	Before COVID-19	After COVID-19	Change
Supermarkets & grocers	82%	71%	-9%
Non-grocery stores (e.g. clothing, fitness, tech)	78%	50%	-26%
Leisure & entertainment	74%	42%	-34%
Banks	65%	36%	-29%

Beyond the online storefront

The pandemic forced many Canadian retailers to refocus their business and reallocate investment, the report says.

"For the surge in online spending to stick, the shopping experience needs to be seamless from the moment a customer goes online or opens an app to the second the product or service is delivered or returned," says Mr. Hughes. "It's only when the front, middle, and back offices are in sync can retailers then truly build and retain customer loyalty and improve their profit margins."

Retailers must bring together their customer journey and customer experience data -- metrics such as cost-to-serve across products, segments, channels, and touchpoints – and connect it to evaluate assumptions and opportunities.

"We now have six months of curated information about the shopping habits of Canadian consumers, many of whom are new to the online space," says Mr. Hughes. "By examining cost, customer satisfaction and value, retailers can start to validate or disprove assumptions about the customer experience and uncover new end-to-end insights that can help deliver significant value."

ABOUT KPMG's Consumer Insights Program research

To understand the lasting impact of COVID-19 on consumer needs, behaviours and preferences, KPMG International surveyed over 70,000 consumers across 11 countries in six separate waves over four months from May 29, 2020 to September 21, 2020. The countries included Australia, Brazil, Canada, China (including Hong Kong), France, Germany, Italy, Japan, Spain, the U.K., and the U.S. Each wave set out to determine how the evolution of COVID-19 is affecting consumer behaviour, and in turn, the implications for organizations. Approximately 1,050 Canadians were surveyed.

The findings were evaluated for the Canadian report in combination with insights drawn from KPMG International's Me, my life, my wallet study, a deep dive into how humans in every corner of the globe are adapting to a world of technology convergence – and how that impacts their life and the ways in which they earn, spend and save. The biannual Me, my life, my wallet survey of nearly 19,000 consumers worldwide was conducted in two phases, pre-COVID and during COVID. Nearly 1,300 Canadians were surveyed.

ABOUT KPMG IN CANADA

KPMG LLP, an Audit, Tax and Advisory firm (home.kpmg/ca) is a limited liability partnership, established under the laws of Ontario, and the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG has more than 7,000 professionals/employees in over 40 locations across Canada serving private- and public-sector clients. KPMG is consistently recognized as an employer of choice and one of the best places to work in the country.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

SOURCE KPMG LLP

Caroline Van Hasselt, Corporate Communications, KPMG in Canada, [phone], [email protected]