Column: Finding the silver lining in slow growth

As the Canadian retail landscape evolves, the road is filled with unique challenges for both manufacturers and retailers. The greatest challenge in 2017? Slow growth. This year is already shaping up to be difficult with less than 1% growth. Let’s take a look at the stumbling blocks facing the fast-moving consumer goods (FMCG) industry.

DEFLATIONARY PRESSURES
Deflationary pressures have eroded retail growth. While consumers see lower prices as a win, this has translated to a potential $819-million loss across Canada in the past year alone. Throughout 2016 and 2017, regular prices have dropped 1.5%; it’s definitely a buyer’s market.

DECLINING TRIPS
Even though Canadians are “winning” at the register, they’re making fewer shopping trips. So far in 2017, Canadian consumers have made 2.3- billion trips, down 7% from 2012. Millennials made the fewest trips, with just 116 annually, while the Greatest Generation made 193 trips. The popularity of warehouse clubs is contributing to the trend. At these outlets, consumers purchase larger-sized items (reducing cost per use), which results in a slower purchase cycle and fewer opportunities for retailers to engage with consumers.

E-COMMERCE
Online shopping is proving to be more than a fad; it’s become a lasting option for time-strapped consumers. And while we’re still in the early stages of e-commerce for FMCG, there’s no doubt online is changing the growth story. In Canada, only some retailers have jumped on the trend, with many not yet offering consumer e-commerce sites. With the Internet in the palm of consumers’ hands, they are no longer restricted to Canadian retailers and have unlimited access to global products that fit their needs and budgets.

AREAS OF OPPORTUNITY
With all this talk of doom and gloom, it’s imperative for retailers to find areas of opportunity to ensure they are reaching their goals. Growth opportunities must be strategic, as consumers are not flocking to take advantage of lower prices and consumption isn’t increasing.

Connectivity at its best
While e-commerce is a challenge, it represents an opportunity for retailers as online and digital outlets create new touch points along the shopper journey. Retailers able to provide an exceptional e-commerce experience will benefit from giving consumers an option to shop at their favourite local stores, while also creating additional touch points and engagement along the path to purchase. Today, e-commerce channels in Canada capture 1.9% of the market; however, by 2020 the dollar share is projected to rise to more than 5%.

Wellness awareness?
Canadians’ desire for a healthier lifestyle is another opportunity for retailers to offer better-for-you items. In fact, 54% of Canadians say they’re willing to pay more for food and drinks that don’t contain undesirable ingredients. It’s worth noting that health and wellness expands beyond food aisles and plays an important role in adjacent departments such as over-the-counter (OTC) solutions. Within OTC, energy and nutrition products, medical and nutritional supplements, and natural health supplements accounted for more than $1 billion in sales in 2016. With all three categories growing (20%, 12% and 4%, respectively), retailers with health solutions on shelf are ahead of the game in meeting consumer demand. Becoming an ally in consumers’ efforts to live a healthier life won’t go unnoticed as Canadians grow more and more health conscious.

Carman Allison is vice-president of consumer insights at Nielsen in Toronto. @CarmAllison. A copy of the report cited in this column is available to Nielsen clients at answers.nielsen.com