Consumer Trends Report – Chapter 2: Consumers and Changing Retail Markets: Summary

Chapter 2 – Consumers and Changing Retail Markets: Summary

2.1 The Changing Retail Market Structure

The structure of the Canadian retail market has changed considerably in recent years. A number of large non-Canadian-based retailers (mainly from the United States) have established a significant presence in Canada, bringing with them new approaches to doing business, such as use of the “big box” retail format, everyday low pricing, and electronic data interchange with suppliers. Several Canadian-based retailers are transforming themselves to compete successfully with these new large players, but in some sectors, locally based independent retailers have disappeared altogether. Canadian consumers have benefited in the short term from the lower prices and added convenience associated with the changed retail market structure, but the retail environment has become more homogenous and concentrated, losing some of the distinctiveness and diversity that consumers enjoyed in the past.

Research opportunities include more analysis of the effects of structural changes, including quantitative research on prices, product selection and choice of suppliers. Other research could assess the effects on consumers of the homogenization of the shopping experience, the impact of the rise of private label brands, and the impact that trends such as “power centres”(three or more big box stores with a shared parking lot) will have on the shopping experience.

2.2 The Increasing Use of Technology in Stores

Retailers' use of – and consumers' interaction with – various in-store technologies has grown over the last few decades, leading to new in-store services. New technologies are used by retailers to manage stock in a more efficient and effective manner, while at the same time offering the potential for consumers to conduct transactions or obtain product information and service without the assistance of a store employee. These developments also raise concerns associated with the ability of commercial parties to collect, process, and track the purchasing habits of consumers. These advances may also create barriers for those who are less adept at dealing with new technologies (e.g. elderly people), thereby contributing to the “digital divide.”

Research opportunities include further consumer-focussed analysis of how emerging technologies change retail competition, and the ways in which savings may, or may not, be passed on to consumers. The most significant area requiring consumer-focussed research relates to privacy and the sharing of digital information on consumers.

2.3 The Internet and the Consumer Marketplace

The Internet has substantially changed the nature of the retail environment. Canadians are increasingly going online to research and then purchase goods and services. By providing information, the Internet has empowered consumers and given Canadians greater and more convenient access to the marketplace. Given Canada's geography, the Internet gives consumers the potential to interact with specialized non-chain sellers who do not have stores in their community. The Internet has also affected the traditional pricing model, but with mixed evidence on its overall impact on prices. While the Internet provides a number of benefits, evaluating the accuracy and reliability of consumer information found on there can be challenging. Consumers have also expressed concerns with respect to online privacy, security and redress. Finally, not all Canadians are benefiting equally from the Internet.

Research opportunities include analysis of how the pricing of various goods and services may be changing as a result of the Internet, and the consequences for the “unconnected” consumers. Further work is also required on solutions to challenges such as assessing the accuracy of online information, ensuring security and privacy, and cross-border consumer protection.

2.4 Technology's Role in Changing Financial Services

The introduction of automated banking machines, point-of-sale debit terminals and online banking has transformed how Canadians purchase goods and access their money. These new technologies have provided consumers with substantial benefits in terms of convenience: accessing one's money no longer requires advance-planning and long, pre-weekend lines at the bank. These technology-based changes in the banking sector also raise issues concerning additional costs, access to local in-person bank services, and (in some cases) greater exposure of consumers to liabilities.

Research opportunities include examining whether self-serve banking puts less technologically sophisticated users at risk and, for the non-users, the impact on their financial options.

2.5 The Growing Presence – and Changing Forms – of Advertising

Canadians are exposed to increasing amounts of advertising, often from foreign sources, and increasingly in new technology-aided forms. At one level, advertising can benefit consumers by providing useful information to aid in marketplace decisions. However, the pervasiveness of advertising – in schools, in e-mails, on bus shelters, billboards, and even in public washrooms and on garbage receptacles – is challenging conceptions of public versus private space. In some cases, such as product placements in television programs, marketing techniques may be so subtle that it is not clear to a consumer that advertising is taking place. The intrusive character of some Internet marketing techniques, such as unsolicited e-mails, has also raised concerns.

Research opportunities include further analysis of how advertising influences children, a generation growing up with unprecedented exposure to commercial messages; sectoral studies on the impact of technologies on the “paid for advertising” model applied to content programming; and as technology-based applications continuously change, the development of acceptable practices – particularly with respect to privacy.