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In market research you want to profile your
specific target market with as much detail as possible. While such
information is essential for a successful business plan do not neglect to
look at the larger picture. Information on the Canadian consumer as a whole
can help you to track trends and identify opportunities you might not have
recognized within your target market proper.
Among economists, one of the key indicators related the Canadian consumer is
"Personal expenditure on consumer goods and services” also referred to as
"Consumer Spending". It can be found in most economic reports and forecasts.
This indicator tracks the expenditure activity of the Canadian consumer and
their level of contribution to overall economic growth. It provides insight
into consumer activity both as a whole and by specific sectors (e.g.
Recreational services).
According to Statistics Canada's latest release (Feb 27, 2004):
“Consumer spending was flat after eight straight years of advances,
averaging 0.8% per quarter. Despite generous incentives, spending on new
cars fell 8.2% while purchases of new trucks plummeted almost twice as much.
As a result, retailers recorded their first drop in activity in two years.
Excluding motor vehicle dealers, however, retail activity advanced 1.0%.
Purchases of semi-durable goods edged down, as spending on clothing and
footwear fell 1.1%. Consumer outlays on services increased 1.0%, with
tourism-related spending on restaurant meals, accommodation and
transportation all recording advances.”
You can find overall annual consumer-spending data at the Statistics Canada
web site:
http://www.statcan.ca/english/Pgdb/econ05.htm.
For the latest quarterly commentary and data see:
http://www.statcan.ca/english/freepub/13-010-XIE/free.htm (Look under
GDP by Expenditure)
For Consumer Spending by detailed consumer goods and services categories you
will need to use CANSIM table 380-0009. You can access this at:
http://cansim2.statcan.ca (Use the
“find by table number” feature). There is a $3 charge per time series.
Tracking how consumers have performed is important. It can help you to put
into perspective your own business/industry's past performance. Most
businesses however are usually more interested in the future.
Statistics Canada does not forecast consumer-spending figures. For this
information you need to look to the web site of your favourite bank, more
specifically their economics section. They all provide quarterly and annual
interpretations and forecasts of economic indicators.
For example according to the latest outlook for consumer spending from TD
Economics (March 11, 2004):
“In sum, while there is no denying that consumer spending growth ended 2003
on a disappointing note, there is nothing in the data to suggest that the
lull is more than temporary. And, looking ahead, as long as the business
sector holds its own - and we expect that it will - the pace of job growth
should be sufficient to quash any real worries on the consumer spending
front.”
As a business you can use this data to gauge the strength of the consumer
environment and the future growth it is likely to have.
Another key economic indicator related to Canadian consumers is Personal
Disposable Income (PDI). This indicator does not refer to income available
after basic expenses are covered (e.g. how much is left over in the
household budget to go to the movies) but rather the amount left over after
payment of personal taxes. It is a measure of the funds available for
personal expenditure on goods and services and personal savings for
investment.
As a consumer business you can use PDI forecasts as a basis for your own
projected growth. Some businesses are affected positively when PDI grows
quickly (especially convenience services and goods) while others can be
negatively impacted.
For example the Ontario Ministry of Agriculture and Food estimates that
Restaurant expenditures represent 4.7% of Personal Disposable Income. As PDI
rises the actual money available for restaurant meals also rises affecting
full service establishments more so than fast food. If a consumer has more
money available to spend the likelihood of eating at a better restaurant
increases.
The latest forecast from a survey of leading Canadian economists indicates
that growth in Personal Disposable Income (PDI) will remain the same as last
year, with PDI expected to grow solidly at 3.4 percent in 2004 and 3.5
percent in the medium term, but decrease to 3 percent over the long term.
(Watson Wyatt)
For your own business you need to compare historical figures of PDI with the
performance of your business and/or your industry over the same period. You
want to determine if there is a direct and apparent correlation between the
two. In other words how does the growth rate in the PDI compared to the
growth rate in your industry's sales level? If a correlation is identified,
you can use economic forecasts of PDI as the basis of your own performance
forecasts.
Sources of information on Personal Disposable Income include:
Personal Disposable Income Per Capita: Commentary
Statistics Canada
http://www.statcan.ca/english/freepub/13-605-XIE/2003001/chronology/2003provincial/pdi.htm
Personal Disposable Income Per Capita: Data Tables
Statistics Canada
http://www.statcan.ca/english/freepub/13-605-XIE/2003001/chronology/2003provincial/tables/pdi01.htm
Latest Economic Indicators
Statistics Canada
http://www.statcan.ca/english/Pgdb/indic.htm
Household Credit Analysis
CIBC
http://research.cibcwm.com/economic_public/download/hca-02022004-internet.pdf
The Current State of Canadian Family Finances 2003
Vanier Institute of the Family
http://www.vifamily.ca/library/cft/state03.html
This report includes % increase in personal disposable incomes, % increase
in household spending, % increase in household debt (1989-2003), average
incomes by family type, poverty rates by family type, major components of
average net worth per household, average debt.
A similar report to the one above is the “How to Retire Rich” feature in the
Feb 2004 issue of National Post Business magazine (p23-64) It does not
include PDI specifically but it does cover the typical budget for average
households and those in the top income quintile by age group (20s, 30s, 40s,
50s, and 60s). Covers: net worth, income, major expense categories
(education, shelter, food, clothing, transportation, utilities, taxes,
insurance, charitable giving), assets, liabilities (credit card debt,
mortgages, line of credit student loans, car loans)
Economic data is important but if you are selling to consumers, you want to
hear from consumers themselves as much as economists (Yes economists are
consumers too but it is unlikely they make up the majority of your market
unless you are selling calculators with special GDP features).
First and foremost are Consumer Confidence surveys. Basically they are
surveys that ask consumers what direction they think the economy will go in
and whether “today” is a good day to make a major purchase (house, car,
major appliance). The idea behind the surveys is to gain insight into the
consumer frame of mind. If bad times are expected consumer spending will dry
up. If consumers think we are living in good times, they are likely to
continue spending. To the bafflement of economists, on certain occasions
consumer confidence can be high despite economic indicators (such as PDI)
pointing in the opposite direction.
There are a number of sources for this information. Ipsos-Reid released
their latest results on March 5, 2004 (http://www.ipsos-na.com/news/pressrelease.cfm?id=2075)
What is especially helpful about the Ipsos-Reid numbers is that the results
are provided by gender, age group, region, education level and income. This
way you gain insight into consumer confidence based on some demographic
elements of your target market. (For example if your target market is young
people (18 to 34 years old) the latest survey reveals that as of February
2004 only 13.4% of this age group expect to curb their day-to-day spending
habits in the next year while 34.5% expect to spend more.)
Decima Research also publishes a Consumer Confidence Index which includes
income, age, region and gender details. (http://www.decima.com/research/WhatsNew/040312E.pdf)
The index is based on slightly different questions and so the results are
often not the same as Ipsos-Reid. Read carefully the questions used in each
to determine which index is more appropriate to your particular needs.
For previous issues and a description of questions asked, search the news
releases available at both web sites.
Ipsos-Reid:
http://www.ipsos-na.com/news/results.cfm?geo=1
NB: Ipsos-Reid conducts other consumer surveys beside the Consumer
Confidence. Search or browse for any that may be appropriate.
Decima Research:
http://www.decima.ca/research/en/media_releases.asp
The Conference Board of Canada also releases a quarterly consumer confidence
survey. Unfortunately their data is for the most part only made available to
their own subscribers. Glimpses of it do appear in the Globe & Mail on
occasion (e.g. Oct 15, 2003 B7). You can view a line graph of their index in
the monthly J.C. Williams Group National Retail Bulletin (http://www.jcwg.com/nrb.htm)
There are numerous other consumer surveys beyond Consumer Confidence. While
the information is not collected as regularly it is still insightful.
One frequent contributor to consumer behaviour data is Moneris Solutions.
Moneris is Canada's largest processor of debit and credit card transactions.
Their news releases provide the percentage increase in retail sales for
specific retail stores and services for individual events (e.g. Le Carnaval
de Québec) or holidays (Christmas shopping). This data reveals where
consumers are spending their money under certain circumstances.
For example a recent release on Le Carnaval de Québec indicates that there
was a 14% increase in retail sales at this year's event over last year's and
that the sectors that are impacted the most by the festivities are
gift/card/novelty stores (up 80% from two weeks prior), hotels (up 50%), and
jewellery stores (up 28%).
http://www.moneris.com/index.php?context=/aboutus/mediacenter/pressreleases&id=58)
Clearly this information is of greater interest to businesses in Quebec City
but other releases such as that from Dec 22, 2003 are of a more nation-wide
appeal. This release revealed the % of Canadians who are last minute
shoppers (38%) and the % who selected debit or credit card as the payment
form they will use most often when shopping this season. (73%).
http://www.moneris.com/index.php?context=/aboutus/mediacenter/pressreleases&id=52
Still other releases are more generic in nature. For example in the April
16, 2003 release
http://www.moneris.com/index.php?context=/aboutus/mediacenter/pressreleases&id=33
Moneris Solutions revealed that Two thirds (66%) of consumers have walked
away from a potential purchase because a store's checkout was too crowded or
too slow. Also, almost one third of Canadian consumers (31%) have decided
not to purchase a product or service because the merchant did not accept the
consumer's preferred form of payment. In 82 per cent of those cases, it was
a debit or credit card payment format that was not accepted. Also credit
cards are the most frequent choice in online (91%), phone (82%) and
catalogue (62%) shopping situations.
To view all their releases go to the Moneris Solutions web site and select
"view all releases":
http://www.moneris.com You will have to
sift through some corporate announcement news releases but the statistical
ones are easy to identify.
Moneris Solutions is not the only company to release consumer survey results
via news releases. All three major credit card companies (VISA, MasterCard &
American Express) employ the same technique and often reveal insights into
Canadian shopping behaviour.
For example: a recent Master Card release identify the % of youth (16-25)
and baby boomers (45-55) who make a point of seeking out and buying products
and services from responsible companies (61% and 73% Respectively)
An American Express study found that while the majority of affluent
Canadians earning over $200,000 don't think they live lavishly, they are
twice as likely as most people to spend $2,000 per person on a vacation
(48%), pay $250 on a hotel room (58%), drop upwards of $300 on an evening
out to the theatre or a hockey game (32%), and think nothing of regularly
doling out $100 for dinner (94%)
Use the Canada Newswire web site (http://www.newswire.ca
) and search on the company name to view the other releases from the major
credit card companies. Once again you will have to sift through
non-statistical corporate releases.
You can also use the keyword search feature of Canada Newswire to locate
other consumer surveys. Simply use the search terms “consumer survey” and
browse the result list. This method uncovers insights such as of % of
Canadians who agree there is too much effort going into finding ways to sell
things rather than actually making them better. (77%) (“BBM Canada Survey -
Provides New Insights on Consumers”
http://www.newswire.ca/en/releases/archive/October2003/16/c1200.html
Advertising and marketing trade publications can also provide a wealth of
data on consumer behaviours. You are best to use a periodical database to
search the two principle publications Marketing Magazine and Strategy
Magazine. You can also use their web sites:
http://www.strategymag.com/ and
http://www.marketingmag.ca/
although subscriptions may be required to view some content.
The type of information included here covers everything from % of Canadians
who believe a widely advertised product is probably good (17%)(“The risk of
frost bite” Marketing Magazine, June 30/July 7, 2003, p22) to the average
number of different loyalty programs a Canadian consumer belongs to (4.5)
(“Auditing Loyalty”, Strategy Magazine, April 21, 2003, p7,8,10).
The Canadian consumer is a unique species. It is essential you understand
some of its quirky behaviour. Your market research should primarily focus on
your specific target market but do not loose sight of "the forest for the
trees". By looking at consumers as a whole you can gain a better perspective
of future growth and potential.
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