Retailers across industries nationwide plan to focus more on dropping prices this year to retain customers, according to the Canadian Retail Insights Report by American Express.
In 2012, the report showed that only 35% of those surveyed would reduce prices to promote loyalty; this year 48% say they will.
Surveying decision makers in the Gas, Grocery, Pharmacy, Restaurant, Fast Food, Apparel and General Retail sectors, the report focuses on what’s top of mind for Canadian merchants, including their industry and business outlook; challenges and pain points; growth strategy; customer loyalty and acquisition; competition; and strategies for attracting customers.
Beyond simply slashing prices, 83% of Canadian businesses will offer sales, promotions or discounts as the top strategy to promote customer loyalty, with General Retail (89%), Apparel (86%) and Grocery (85%) ranking highest. Fast Food is the only industry surveyed that plans to invest in improving customer service (92%) as its top strategy for the next 12 months, slightly ahead of dropping prices.
Businesses are split when it comes to focusing on either acquisition or retention as their key business strategy and focus for the year. Gas, Fast Food, and General Retail are all focused on reaching new customers; whereas Pharmacy and Grocery are putting their efforts behind keeping current customers. And while the Apparel sector is weighing new customer wins slightly more heavily than maintaining current customers, as a vertical it is also putting an increased focus on keeping current customers happy (a 14 percentage point increase over 2012).
Customer service also continues to be vital for all sectors, with 89% of retailers agreeing they need to put more focus on customer service (increased from 2012 by 6 percentage points). As a result, 77% of retailers report they will invest in improving customer service this year.
Although not relevant for every industry, the acceptance and use of new technologies in retail continues to grow, with over half of businesses (51%) agreeing that consumers are switching their purchasing behaviour online. Seventy-two percent of Canadian businesses that offer online shopping agree it’s helping attract customers; the General Retail (50%) and Apparel Sectors (37%) driving e-commerce growth, ranking it as a top priority for the year ahead.
The report makes it clear that mobile technology is still in its early stages of adoption in Canada, with only one in ten (12%) retailers surveyed claiming that their online sales come from mobile transactions.
Most say competition, both new (62%) and existing (65%), is their top concern. But business owners’ optimism remains consistently positive for both their own industries (76%) and their own businesses (83%).