Consumers are spending less, but small businesses can adapt: BDC

Geopolitical tensions, environmental concerns, rising prices and reduced spending power are motivating Canadians to cut back and entrepreneurs can respond, according to the latest edition of BDC’s 2023 Consumer Trends report.

Andrea Piacquadio

“These trends have become part of our daily lives, and we realize that they are associated with the larger trend of consuming and owning less, whether it’s a conscious choice or to save costs,” said Pierre Cléroux, Vice-President, Research and Chief Economist at BDC. “Today’s prudent consumers have different expectations; it’s important to keep these in mind when adjusting to shifts in their behaviour.”

The BDC (Business Development Bank of Canada) said the study explores what increasingly cautious consumers expect, how and why they decide to purchase and, more importantly, how businesses can direct their efforts to adapt. Back in 2016, when BDC conducted a similar study, millennials were driving the hyper-connected consumer revolution, sharing platforms were just emerging and there was a need to better target consumers with personalized messages and experiences.

For example, bringing sustainability to all aspects of the business, as well as promoting sustainability efforts, can go a long way, said the report.

Here is what BDC identified as three emerging trends with important implications for all businesses, regardless of size or industry:

Just over a third of Canadian businesses (34%) have redesigned the customer experience, even though most consumers (90%+) strongly agree that a simple and satisfying experience is fundamental to the consumer-business relationship.

Proactively managing online reviews can help entrepreneurs who have a strong presence with younger generations keep track of what’s being said online and correct points of misinformation. Technology can help for many aspects of the clients’ journey, including marketing automation, e-commerce websites and identifying the right channels to effectively deliver customer service.

Only one in 10 businesses offer a way for consumers to purchase used, refurbished, or returned merchandise. Entrepreneurs are not honing in on a trend that appeals highly to millennials, Gen X and baby boomers alike. In fact, almost two thirds (61%) of consumers prefer to live simply.

Entrepreneurs can help their clients consume less by rethinking their product design to improve their environmental footprint. Another prime example of appealing to different generations is to segment messages to personalize communications based on past purchasing behaviour.

Consumers want businesses to inspire trust, and just over half of them (56%) have stopped buying from companies whose business practices they don’t agree with. To be a better corporate citizen, entrepreneurs can consider third-party certification to acknowledge they live up to the highest standards. Knowing what makes their customers tick shows that they care and helps them stand out from competitors.

To increase the reach and relevance of its support to entrepreneurs, BDC also analyzed each trend’s importance according to Gen Z, millennial, Gen X, and baby boomer generations.

It said age matters: “few businesses (29%) are taking a generational approach to the products and services they offer, although behaviour, values, and beliefs vary by age. For instance, environmental considerations are more important for millennial consumers. Taking a generational approach to understanding purchasing behaviour can be valuable to businesses looking to better target their customers, as not all trends are expressed the same way.”

Mario Toneguzzi