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Over the past five years, the pandemic and the increasing cost of living have both influenced consumer behaviour trends in Canada.
Using insights from SalesPRO and the Numeris RTS survey, we have examined these changes in consumer behaviour, focusing on online shopping, spending across various retail categories, the effects of inflation, and attitudes towards environmental issues. This analysis is based on the latest RTS Fall 2024 survey, which includes data from respondents collected between July 2023 and July 2024.
Online vs in-store shopping
During the pandemic, one of the most significant shifts in Canadian shopping habits was the rise in online shopping. With lockdowns and social distancing measures in place, Canadians increasingly relied on e-commerce for their purchases. Statistics Canada reports that from February 2020 to July 2022, retail e-commerce sales surged by 67.9%, and the sector is projected to reach $119 billion by 2025.
The RTS survey explores people's shopping preferences, whether they favour the in-store experience or the convenience of online shopping. Overall, Canadians aged 12 and older still lean towards in-store shopping. Although the preference for online shopping has grown by 34% over the past five years, it appears to be leveling off, with a slight increase in in-store shopping noted in the latest survey.
However, there is a distinct difference in preferences among 18-34 year-olds. Although they still favour online shopping over in-store visits, their preference is shifting, with the previously widening gap between the two now narrowing. Their inclination towards in-store shopping has returned to its level from two years ago.
Regionally, people in Quebec and British Columbia are more inclined to shop in-store, whereas those in Ontario tend to prefer online shopping.
Shifts in spending by category
Recent data from RBC indicates that consumer spending is on the rise, yet it still hasn't reached pre-pandemic levels. The RTS data for this year tends to agree and reveals that some spending patterns that developed during the pandemic are starting to shift. We can categorize these changes into four distinct patterns based on average annual spending:
Declining: These categories were affected by the pandemic and have not yet bounced back. This includes sectors like hair salons, cross-border shopping, and apparel, especially children's clothing, which is 17% lower in the Fall 2024 survey compared to Fall 2019.
Growing: These categories were impacted during the pandemic but have since improved. Notably, personal dining and cosmetics fall into this group. The average monthly cosmetics expenditure is 4% higher than in Fall 2019, largely driven by teenagers, whose spending in this area has surged by 77% since last year.
Emerging: During the pandemic, people invested more in items that enhanced home life. Some product categories that grew during the pandemic remain above pre-pandemic levels. Average spending on garden supplies, toys, and home décor is 8%, 7%, and 4% higher, respectively, than in Fall 2019.
Returned: The books and furniture categories, which saw growth during the pandemic, have now returned to previous levels. Additionally, the percentage of respondents planning to purchase furniture in the next two years has decreased by 11% in this fall's survey.
Average annual category spend ($, all Canadians aged 12+)
The average spending by Canadians in restaurants is still on the rise, especially for business purposes, although the growth isn't as pronounced as it was last year. Despite financial challenges, 61% of respondents reported dining out in the past month, marking a 3% increase from the previous year.
This uptick in restaurant visits is affecting other food ordering methods. Both home delivery and takeout have declined, yet online delivery platforms like Skip the Dishes and Uber Eats have experienced a 7% increase year over year, with 15% of Canadians indicating they used such a service in the past month.
Impact of inflation on consumer behaviour.
The pandemic led to a change in spending priorities for Canadians, and the rising cost of living continues to shape their purchasing decisions. Amid financial uncertainties, many Canadians have become more cautious with their spending.
It's evident that Canadian consumers are now more price-sensitive, choosing more economical options. In the past month, 60% of Canadians aged 12 and older have shopped at a dollar store, and 32% have used an online classified website.
Impulse buying is on the decline. Only 20% of Canadians say they would make an impulse purchase if they see something interesting in a store, a decrease of 5% from last year. Brand loyalty is also affected, with 40% of Canadians willing to forgo their favourite brand if another is on sale, an increase of 5% from last year.
RTS data indicates that average monthly grocery spending has risen by nearly 4% over the past two years. However, lower-income households are feeling the pinch more acutely, with their average spending up by 7%, compared to just a 1% increase for higher-income households.
Household average weekly grocery spend
Increasingly, Canadians are concerned about not having enough money for retirement. According to the RTS Fall 2024 survey, 39% of Canadians share this worry, with heightened concern among the 18-34 age group, where 51% are anxious about their financial future.
Environmental/social issues in relation to consumer behaviour
The pandemic initially increased awareness of environmental and social issues, but their significance has since diminished. During the pandemic, data indicated that Canadian consumers prioritized purchasing from socially responsible and environmentally friendly companies.
They were also more inclined to pay premium prices for eco-friendly products and to support Canadian retailers when shopping online. However, according to the latest Fall 2024 survey, these factors have continued to decrease in importance.
% of Canadians aged 12+ who agree with the following statements
The landscape of Canadian consumer behaviour is evolving in response to many different factors. While online shopping remains a significant trend, the gradual return of in-store shopping highlights a nuanced consumer preference. Spending habits are slowly realigning, with some categories rebounding while others continue to lag. Inflation and financial concerns are driving more cautious spending, impacting brand loyalty and increasing the appeal of budget-friendly options.
Although environmental and social considerations have waned in importance, they still play a role in consumer decisions. As these trends continue to unfold, businesses must adapt to meet the changing needs and values of Canadian consumers.
SalesPRO is used here to analyze the Numeris RTS survey. If you would like more information on this software please get in touch with your Account Executive.
This post was originally published in October 2021 and has been completely revamped and updated for accuracy.