Emerging Consumer Trends - The Internet Bump

Dec 19 2017, 4:37 pm

The attitudes and preferences of Canadian consumers, having been impacted by the advances in technology, changing demographics, and the recent 2007-2008 global recession, have evolved, and in turn generated many new business opportunities, as noted in the report released this week by the Business Development Bank of Canada.


The Internet Revolution

Image: BDC

The readily available, massive and affordable access to the internet is one particular trend that is reshaping consumer behaviours and habits, not to mention traditional marketing tools and strategies. The report notes that most Canadian consumers are now connected 24/7 through multiple internet-enabled devices.

In statistics from 2012, 84 per cent of the population was connected to the internet, and on average, each user had 2.6 internet-capable devices, including mobile phones, laptops, desktop computers and tablets. The growing smartphone-ownership demographic only further enhances the “always-on” internet presence. Over half of Canadians now own such a device, and are often avid social media users as well, with nearly two-thirds of Canadian internet users logging onto Facebook, Twitter, or LinkedIn every day.

With consumers now expecting a near seamless flow between their online and offline activities, companies have had to quickly adapt their business strategies to reflect online-driven behaviour, or risk obsolescence.

Most purchasing decisions are now made online

Nearly half of all Canadian consumers tend to seek advice online via channels specific to a product category, prior to purchases. Designing an appropriate and efficient online presence to maximize this strategy is a key way to influence buying decisions.

A study from the Boston Consulting Group showed that small and medium-sized enterprises (SMEs) with a well-developed web strategy have experienced revenue growth that was up to 22 per cent higher than other SMEs. A simple web presence is no longer cutting it.

Online reviews are among the most trusted sources of opinion for consumers

The BDC report released this week notes that approximately seven in 10 online users in the U.S., Canada and the U.K. claim to trust online product reviews, a fraction that is proportionally higher than that of other consulted sources. Over three-quarters of internet users say that online ratings and reviews influence their buying habits, and over half state that positive online reviews make them more likely to use a local business. In 2012, roughly half of consumers had read reviews of restaurants or cafes, up about 20 per cent from 2010. One in five consumers also increasingly consulted reviews of hotels, B&Bs and guesthouses, as well as ratings for doctors and dentists.

In an interesting statistic, just under a third of smartphone users now also prefer to turn to their device for product information in-store, in contrast to asking store employees.

Now-a-days, carefully managing online customer feedback is key for any business. Monitoring review sites and reacting quickly is essential to maintaining a positive image. Most review platforms allow companies to respond publicly to user reviews, which is great way to show potential customers how a company reacts to both positive and negative feedback, and maintains their reputation.

Consumers who look for product information online do not necessarily buy online 

A recent BDC-Ipsos survey showed that Canadian consumers are most likely to seek online info about tech devices, travel/tourism, and vehicles before buying. This tends to apply to men, Generation X consumers, and those with an annual household income over $60 K.

When it comes to actually purchasing online however, categories such as clothing, shoes, jewellery and accessories rank first, followed by travel/tourism, cultural good and tech devices. The survey noted that of those buying goods and services online, most consumers were aged 18-54.

What is important to take away from this is that overall, consumers are more likely to simply seek information online than to actually complete the online purchase. Many factors could account for this, including online purchasing availability via the website; importance of the purchases in relation to price and risk; the ease of doing business online; and how quickly the product can be delivered.

Vehicles especially drew a large gap between the proportions of consumers seeking info and buying (53% vs. 6% respectively).

Price comparison tools are turning certain retail stores into showrooms

Not surprisingly, the BDC-Ipsos survey notes that nearly two-thirds of Canadian consumers consider low price one of the most important aspects of a product purchase, with over half of smartphone users claiming to compare product prices in-store. That being said, this trend seems to focus on more expensive products such as appliances and electronics (74% and 70% respectively).

It is important to note that 83 per cent of retailers recognize that shoppers can easily find a better deal elsewhere, making customer service more important than ever. This may be in response to the growing retailer concern about an emerging behaviour called “showrooming”, where stores are perceived as showrooms, while the internet is seen as the place to make the purchase. In Canada,  more than one in 10 consumers admit to having visited a store simply to test out a product before buying it online, with the price discount differential required to make them choose to buy online ranges between 10 per cent to 20 per cent.

Smartphones have become the perfect shopping companion

With over half of Canadians owning a smartphone, portable access to the internet allows for proximity searches on businesses and quick online product research. Nearly all smartphone-carrying consumers claim to use their phone for pre-shopping activities, and three out of five use it to the find the location and hours of operation for a business that offers a particular product. Nearly half of Canadian consumers use their smartphones to find promotional offers, one-third check product reviews and availability in local stores.

The changed path of consumer purchasing: Opportunities for SMEs

A relatively underdeveloped online Canadian retail presence offers substantial growth opportunities for SMEs. Rising 14 per cent from the previous year, online retail sales in Canada reached $5.4 billion in 2012, and are projected to surpass $10 billion by the end of the decade. Though lofty numbers, historically Canadian e-commerce significantly lags behind the rest of the developed world, with global internet retailing reaching US $521 billion in 2012. With most Canadian businesses being reluctant to develop the proper online presence, the door has been left open for foreign-owned retailers to bite hard into the market share. U.S. retailers such as Amazon, Apple, Walmart and Dell together represented 57 per cent of online sales by our American neighbours in Canada. In comparison, Canadian retailers such as Indigo, The Bay and Canadian Tire represented less than 3 per cent, and have been losing market share as of late. Canadian small and medium-sized business need to move quickly to develop and embrace these market changes, and those that can should see success in this new reality.

Strategies for SMes

With the internet and smartphones playing such a heavy factor in consumer purchasing and the traditional means of communicating with those same consumers no longer being enough to spur sales, the BDC report notes a few general rules:

Build and develop an online presence

SMEs can establish and develop an online presence with relatively little effort. Overall, Canadian consumers are interested in finding out more about products online, regardless of whether they end up buying the product online or in-store. Ideally, clear and easily accessible information should be available across multiple online platforms and seamlessly adapted to each platform’s strengths. Most of these tactics do not cost much to implement, such as enhanced Google Maps integration (e.g., hours, business photos); an active presence on review sites to address any negative customer comments; and a social media approach that allows customers to connect with the business in a meaningful way, not just as a selling platform. A more expensive tactic is to set up a website that enables online orders, offers detailed information on products (e.g., large, high-quality photos) and provides options for in-store pickup or local delivery.

Be aware of online competition

The Internet makes it easy for consumers to compare prices. Competitive positioning based on price is no longer limited to local retailers but can also include remote online competitors. Since it is becoming virtually impossible to compete with online retailers based on price alone, companies should highlight the value-added aspects of their products and services to differentiate their value proposition.

Use client experience and product customization to counteract “showroom behaviour”

Smartphone users now have an effective shopping companion tool available at all times. These empowered consumers are likely to use local retailers as product showrooms and make their actual purchases online. Businesses that are more exposed to this phenomenon (e.g., those that sell high- ticket items with higher perceived risks) can address it by enhancing the customer service experience and product exclusivity. For instance, they can offer proprietary products, exclusive partnerships, customization or preferential services.

Understand your market and focus on the right channels

Understanding how the Internet has reshaped the customer’s decision-making process can help SMEs develop an effective online strategy. The right choice of multi-platform channels will enable the company to tailor its approach to the new purchasing reality. A good starting point is to leverage online channels (e.g., targeted ads, relevant social media efforts) to build awareness and complement traditional marketing tools. Businesses can also help the customer form an opinion about a product during the consideration phase by providing additional product information and monitoring opinion-shaping sources, such as user review sites. Ultimately, the goal is to offer the customer flexible acquisition options that make the purchase experience seamless, whether it occurs online or offline (e.g., giving detailed business information on multiple platforms such as Google Maps or dynamically displaying inventory levels).


Stay locked to Vancity Buzz for our continued, week-long coverage of BDC Small Business Week, and the five consumer trends shaping the future of Canadian business.

Featured Image: Dmitry Kalinovsky / Shutterstock

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