The 2020 Canadian Retail Landscape

What is the Canadian retail world going to look like in 2020?

 

 

Where is retail heading in the digital age and what factors are contributing to its evolution? If you attended the latest COPA seminar on Monday, January 19th, you got a pretty good picture of not only the retail landscape in Canada - but the outlook for business in general in Canada over the next 5 years.

Tim O'Connor, from RetailNet Group conducted an informative seminar on the factors that are changing retail and in fact are changing the way all of us approach our various businesses. To follow are some of the key points made by Mr. O'Connor but for a more detailed synopsis, contact COPA for a copy of his presentation.

Where do we stand right now?

• The recovery from the recession continues at a slow pace which is squeezing overall business profits
• The population is not growing - any growth in population must come from immigration
• The work-force population is aging
• A decline in real wages beyond the upper tiers means the middle class is shrinking
• Overall household debt is increasing
• We are experiencing a period of rising currency and interest rates
• According to the Canadian Development Bank - 98% of businesses in Canada are small businesses (1.1 million businesses)
• 87% of small businesses have fewer than 20 employees
• Women lead 1/3 of these businesses
• 7 million Canadians are self-employed

What will 2020 look like?

• Low population growth
• Smaller households
• increase in Immigration to replace population declines
• Top 3 sources of Canadian immigration: Philippines, China, India
• 18% of total population will be 65+
• Continued increase in urbanization
• Retail footprints will be smaller but closer to concentrated urban areas - as opposed to big box destination centres
• Trend towards renting assets than owning - especially for Millenials
• Home ownership still the main goal for most Canadians
• 25% of overall store base is at risk
• 40% of current merchandise at risk
• 30% of store growth will be in the area of services

The next generation: Millenials (1980 to 2000)

• Over the next 15 years, this group will represent 75% of the work-force population
• In the US, there are 55 million 18 to 30 year olds, largest generation ever (more than Gen X or the Baby Boomers) and are entering their peak consumption years
• Right now they represent 21% of overall income
• Marrying and starting families later
• Far more technologically savvy than any other generation
• Live in a world where everything is just a "click" away
• Instant gratification
• Digital has a profound impact on how this group shops
• 85% plus are outfitted with cell phones
• Strategies need to be developed to reach this generation

What are the effects of Technology?

• 2014 holiday season - 34% of Canadians used ecommerce solutions to make purchases - up from 23% in 2013
• 72% of shoppers went on-line to do research during the 2014 holiday season
• 56% of shoppers who did on-line research made a purchase the same day
• 32% of on-line shoppers/researchers are over the age of 33
• Amazon.ca is the dominant source for product research (over google)
• "Click and Collect" solutions, are they the next big thing? Place your purchase on-line and then collect your goods at a drive-up retail location (currently being tested by Loblaws)

What will an Office Supply store look like in 2020?

• Shift from Big Box to Small Box to Digital
• Downsized stores will be more digitally integrated with targeted merchandise
• Office Supply superstore of 2020 will be in the 12,000 sq. ft. range carrying 5,000+ products with an emphasis on services
• Information based merchandising, with an emphasis on demo's

We are living in time of great change. Demographics, population patterns, technologies and marketplaces are all going through profound changes - how your business plans and adapts for these changes is the key for both survival and continued success.

For a copy of the overall presentation, contact Nicole Gamble at COPA, ngamble@copa.ca

ABOUT THE SPEAKER

Timothy V. O’Connor, vice president, RetailNet Group, the foremost leader in analyzing the technologies that are transforming retail. Tim is an industry analyst and strategist for leading retailers and manufacturers including Walmart, Safeway, Canadian Tire, Walgreens, Coca Cola, Energizer, SC Johnson, and a number of trade associations such as IDDBA and PBBA. Tim’s insights on retail competitive dynamics and strategies have been featured in Wall Street Journal, Bloomberg Business Week, Financial Times, Toronto Star, Hartford Courant, and FTSE GlobalMarkets. He has been a featured presenter at the IRI Private Label Conference, OPI Executive Leaders Forum and Food Marketing Institute (FMI), and other retail and CPG industry events.