Understanding Consumer Loyalty in Canada
Canadian consumers today have unprecedented choice, power and influence with regard to what they watch, buy and where to shop. But as choice increases, loyalty has a tendency to decrease, with shoppers in Canada placing more emphasis on value. With online shopping and browsing gaining momentum, shoppers have access to more information, and Canadians continue to seek value.
It goes without saying that an increase in available products will lead to an increase in choice. In fact, 15% of SKUs in-store are new products with 49,667 new products introduced in the Canadian fast-moving consumer goods (FMCG) marketplace in 2017. And even as some products that year were discontinued, the bevy of new products greatly outpaced them, accounting for nearly 15% of SKUs in the grocery store.
Given the wide array of choices available today, brands have to work harder than ever to keep them loyal. In fact, “banner loyalty” averages just 15% in Canada, which means that for every $100 a consumer has to spend on FMCG items, they only spend $15 on one particular banner, leaving $85 up for grabs across direct and indirect competitors. While consumers may be less loyal to store banners, understanding that consumers are becoming more loyal to specific retail channels when shopping specific departments will derive insights as to which area of a particular store needs more attention, and focusing on attracting new consumers is potentially healthier than spending time an energy with already loyal consumers. For example, warehouse club stores have 19% loyalty in Canada, however when it comes to paper products specifically loyalty nearly doubles to 39%.
Remember, at the end of the day you following your consumers and providing what they desire on the shelves. Do what is best for your company by reaching for long term health you need to attract new consumers and focus on category conversion, look for niche opportunities to differentiate and grow your brand and always remember innovation is key to drive incremental growth to keep consumers engaged.