Expectations for the Year Ahead
By Angela Altass
A Future of Commerce report by technology company Square in collaboration with Wakefield Research states that Canadian retailers and restaurateurs are optimistic about the year ahead despite economic uncertainties. “Even amid high inflation and a potential recession, businesses are eager to adopt new strategies and solutions to retain and attract customers.”
The report states that 2023 is all about diversification, with a vast majority of restaurants planning to expand their non-core products and services, such as selling retail goods and meal kits or offering cooking classes. One of the really fascinating findings from this report is that restaurants are saying that on average 21 per cent of their revenues are coming from products and services outside of the core restaurant experience, says Ara Kharazian, data and research lead with Square.
“Our report makes it clear that proactivity is the name of the game this year, with Canadian restaurateurs and retailers moving full speed ahead to implement new sales channels and technology to improve customer experiences in 2023 and beyond,” says Alyssa Henry, head of Square.
The report from Square notes that Gen Z is becoming increasingly important to retailers with Canadians born between 1997 and 2012 playing a big role in shaping the way sellers operate and market their businesses. “So great is Gen Z’s influence that more than half (53 per cent) of Canadian retailers are devising entirely separate marketing approaches to target these younger customers.”
In-store selling is seeing a post pandemic resurgence and many stores are planning to introduce QR codes in-store to provide customers with additional product information and promotions.
Food and drink businesses are increasingly leaning on technology to automate their businesses and are using automation to respond to staffing shortages, says Kharazian. The Square report indicates that 38 per cent of restaurateurs say they will automate operational activities to maximize efficiencies and 66 per cent of consumers prefer some form of automation, whether for reservations or ordering of food.
“We saw a lot of this start to emerge due to the pandemic and now it’s really an expectation of consumers,” states Lisa Fong, head of product, restaurants for Square.
A recent webinar by the Coffee Association of Canada talked about the role innovation is playing as it took a look at “The Year Ahead: Consumer Trends and Behaviours.”
“There is a lot of innovation taking place in the beverage category overall,” notes Robert Carter, president of the Coffee Association of Canada. Coffee and tea equipment innovation has been driven by operator necessity to reduce labour, says Margot Swindall, director of business development with Technomic, who adds that consumers, especially the younger ones, are very open to innovation and are actually looking for and demanding it. They like coffees that they can grab quickly and make themselves with the push of a button on a machine.
While the Square report has indicated that retailers and restaurateurs are remaining optimistic, a Canadian economic confidence report by Leger indicates some less encouraging numbers.
“I hate to be the bearer of bad news but there isn’t a whole lot of good news,” says Steve Mossop, executive vice president, Leger Vancouver. Speaking at the Coffee Association of Canada webinar, Mossop said the numbers are not encouraging when looking at the overall economic confidence of Canadians, as people feel the sting of rising interest rates. “We are back to the worst reading since the lows of the pandemic.”
While only 36 per cent of Canadians have a mortgage, 10 per cent of those Canadians feel severe economic pain from even a single point increase in mortgage rates, says Mossop. “Thirty per cent of mortgage holders are saying they don’t know how they are going to pay their mortgages.”
Forty-five per cent of Canadians say they expect the economy to decline going forward and 53 per cent of Canadians are at the point where they worry about paying their day-to-day bills.
“The pain points are the recession and inflation,” says Mossop. “They are constantly on people’s minds.”
Swindall notes that as people are switching to purchasing private label products as a way to economize, they are also continuing to treat themselves with small luxuries, including coffee purchases.
“Convenience stores were heavily impacted by the pandemic, especially with the breakfast order,” says Swindall. “We are now back to seeing beverage consumption and purchases for beverages away from home become even better than pre-pandemic. That is an exciting and encouraging development. Younger consumers are tending to gravitate to the convenient options.”
Jo-Ann McArthur, president and founding partner, Nourish Food Marketing, notes that the Gen Z generation is learning about coffee culture from social media, and from Tik Tok in particular. The Square report also talked about Gen Z and how this demographic sees social media as part of the fabric of life with 95 per cent of them relying on their mobile phones to shop. As a result, retailers are increasingly selling products and services through social media.
“Seventy-two per cent of retailers with online sales sell through Facebook, up from 65 per cent a year ago,” states the Square report. “Instagram is the second most popular social media site for selling, with 65 per cent of retailers allowing customers to purchase through the platform, up from 55 per cent last year.”
As Canadians struggle with their expectations and grapple with the current economic state, it’s more important than ever to meet consumer expectations as much as possible. As everyone tries to anticipate what the future will bring, store owners can help themselves by gathering as much information as they can from sources such as Square’s Future of Commerce report and webinars or other events hosted by organizations such as the Coffee Association of Canada.