A new report by the Business Development Bank of Canada (BDC) has found that close to two-thirds of Canadian consumers have been motivated to buy locally in the past year. This is one of five major consumer trends that research indicated should be of interest to growth-oriented small and medium-sized enterprises (SMEs). The report also found that SMEs have tended to respond to demand for healthy, well-priced local products, but have given less attention to demand for online retail options.
Entrepreneurs must watch consumer trends to grow business: new BDC report
Canadians flock to buy local products
Montreal, October 21, 2013—According to a new research report released today by the Business Development Bank of Canada (BDC), five consumer trends will have a permanent impact on Canadians’ buying habits and create growth opportunities for small and medium-sized enterprises (SMEs).
The report identifies five consumer behaviours—the buy-local movement, rising health awareness, frugality, mass customization of goods and the impact of the Internet—that have emerged as a result of advances in technology, changing demographics and the 2007–08 recession.
“These consumer trends have created rich business opportunities, which entrepreneurs must seize on if they want to grow their businesses,” said Pierre Cléroux, Chief Economist, BDC.
However, the research shows that entrepreneurs have not embraced all trends equally. Some SMEs have begun catering to the increased demand for healthy, well-priced local products, for instance, but e-commerce has been slower to catch on. In fact, the Canadian online retail presence remains largely underdeveloped and, as a result, e-commerce has lagged behind that of most other nations, with some of the lowest penetration levels in the developed world.
“Regardless of whether they buy a product over the Internet or in a store, more consumers are influenced by what they see on online channels,” said Mr. Cléroux. “Entrepreneurs must realize that a simple website is no longer sufficient for businesses. Instead, they need to adopt a multi-channel approach.”
The “Made in Canada” advantage
Of all the consumer trends, the buy-local movement has been the most powerful. Close to two-thirds of Canadians say they have made an effort to buy local or Canadian-made products in the past year, and two in five consider local production an important factor in their buying decision.
“The ‘Made in Canada’ brand is powerful because Canadians have clear understanding of what buying locally made products means to the national economy,” added Mr. Cléroux.
The research shows that consumers who buy local do so for economic reasons: 97% of Canadians do it to support the local economy, 96% do it to support local farmers and 93% do it to create local jobs, while 87% think it is better for the environment.
Quebecers and Atlantic Canadians are the most faithful users of locally made products, with roughly three-quarters indicating they recently bought products made in Canada; consumers in Saskatchewan and Manitoba are the least likely to do so.
BDC’s study also found:
Half of Canadians consider the health impact of a product when making purchasing decisions and one-third are willing to pay a premium for healthy products.
Mass customization has emerged as the go-to technique for delivering tailor-made products and services to customers at prices and lead times that match those of mass-produced products.
The Internet is much more than an online purchasing tool; it is now embedded throughout most product purchasing journeys.
Seven out of 10 consumers have reduced their spending since the recession, and two-thirds consider the lowest possible cost the most influential factor in their purchasing decisions.
The recession also weakened consumer confidence, and low interest rates have spurred high debt levels.
“Consumers want personalized, high-quality products at reasonable prices and are using many penny-pinching strategies like group couponing to get more bang for their buck,” said Mr. Cléroux.
More detailed research results are available: BDC Study (PDF).
See accompanying infographic (PDF).
BDC announced the research results during the launch of BDC Small Business WeekTM, which runs from October 20 to 26 under the theme “Success Ahead! Map your future growth.”
About the Report
The BDC Research and Economic Analysis team and Deloitte prepared the research presented in the report. Complementing the report is a new and exclusive BDC survey of 1,023 Canadians on consumer behaviour trends, conducted by Ipsos in August 2013 the “BDC-Ipsos survey” (PPT). BDC Small Business WeekTM is a trademark of the Business Development Bank of Canada.
About BDC Small Business WeekTM
BDC Small Business WeekTM is a Business Development Bank of Canada (BDC) trademark. Its origins date back to 1979, when BDC business centres in British Columbia’s Lower Fraser Valley pooled their resources to organize a week of activities for entrepreneurs. This first event and one that followed in 1980 were so successful that BDC officially launched Small Business Week across Canada in 1981. The initiative was quickly adopted by Canada’s business community. In 2012, more than 200 activities across Canada attracted close to 10,000 businesspeople to BDC Small Business WeekTM. This BDC flagship event celebrates entrepreneurship at the local, provincial and national levels. www.bdc.ca/sbw
Canada’s business development bank, BDC puts entrepreneurs first. With almost 2,000 employees and more than 100 business centres across the country, BDC offers financing, subordinate financing, venture capital and consulting services to more than 28,000 small and medium-sized companies. Their success is vital to Canada’s economic prosperity.
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