Canadians will embrace 'conscious consumption' in 2025: NIQ
In recent years, Canadians have faced unprecedented inflation, struggled with the cost-of-living crisis and navigated ongoing economic uncertainty. With a rough road still ahead, 2025 will be the year of “conscious consumption,” where consumers focus their spending on what matters most. This insight comes from NielsenIQ’s Carman Allison, who was speaking at Canadian Grocer’s recent GroceryConnex conference in Toronto.
The VP of global thought leadership offered an in-depth look at the current mindset of Canadian consumers. According to a recent survey by NIQ, 42% of Canadians report being in a worse financial position than they were a year ago. Factors such as rising living costs, economic slowdown and job insecurity or loss are contributing to this shift. Canadians are also less optimistic about their financial position compared to the global average. “The increased cost of living is still plaguing [Canadian] consumers,” said Allison.
READ: Inflation is down, wages are up. Why are Canadians still frustrated with the economy?
And the impact is most felt at the grocery store. According to NIQ’s 2024 Mid-Year Consumer Outlook report, rising food prices are Canadians’ top concern (45%), far outpacing concerns about increased housing costs (18%), the increased cost of utilities (14%) and rising interest rates (13%). At the same time, Allison noted the country’s wealth polarization, with some Canadians experiencing significant financial gains. However, for most Canadians, that’s not the norm.
While inflation has eased (sitting at 2%, as of October), it continues to affect consumer spending power. “One thing I get asked a lot is, now that inflation is ‘normalized,’ is volume [in CPG] going to return to a positive?” said Allison—the answer isn’t so simple.
While dollar growth has slowed (3% year-to-date in 2024 compared to 5% in 2023), volume is no longer in decline (+1% compared to -1% in 2023). “The good news is we are starting to see volumetric growth… but it’s still lagging population growth,” Allison said.
NIQ also asked consumers about their spending intentions for 2025. More than half (51%) plan to cut back on out-of-home dining and 42% plan to spend less on food delivery and takeout. Nearly one-third (31%) plan to spend more on grocery and household items (31%). However, how they spend will be very calculated, said Allison. For instance, 53% of consumers plan to buy only what they’ll use to avoid waste and 49% will plan ahead to manage spending. Notably, 47% of Canadians are cooking from scratch more often to save money.
According to Allison, value matters the most for consumers, and this demand for value continues to fuel overall CPG growth. Key consumer behaviours driving this trend include buying on promotion, buying private label and shopping at discount retailers. While conventional grocery still has the lion’s share of the market, the grocery discount channel increased its share of trade by 8%, while conventional grocery’s share declined by 1%.
“The concept of value is changing—it’s almost table stakes now,” Allison said. While promotional activity may be the way for CPGs to win over consumers, Allison advised doing it in a way that is strategic and profitable.
GroceryConnex took place at the Fairmont Royal York in Toronto on Nov. 25.
