Shopping in Canada going through a radical change
Changing consumer expectations and habits threaten to see even more Canadian retailers close in 2018, says KPMG's Willy Kruh, Global Chairman, Consumer and Retail National Leader, High Growth Markets Canada.
"Retail is not in disruption but is disrupted," says Kruh. "Consumer behavior is changing rapidly and many Canadian retailers are not keeping pace with the fact that consumers and their shopping habits are undergoing fundamental change. But this is not just a Canadian phenomenon. Retailers in the U.S. are grappling with the same issues. A record 8,600 stores are expected to close up shop stateside this year. Previously, the worst year for closures was the 6,163 stores in 2008 - and that was at the height of the financial recession."
Kruh notes that the fundamental changes that are impacting domestic retailers have been somewhat masked by a couple of key factors that they likely won't continue into 2018 - a robust economy and low interest rates. "With the economy expected to slow next year and interest rates already up twice this fall, consumers are going to be hard-pressed to keep on spending. Debt is at record levels and the Bank of Canada has made the cost of carrying that debt even higher. So as consumers feel the squeeze so will retailers - especially those who need to do more to optimize the shopping experience."
In addition to the expected drop in retail spending next year, Kruh says we are also currently witnesses to the collision of three revolutions that are disruptive and industry-defining – creating a perfect storm that will hit retailers head-on.
Geographic and geopolitical revolution
Six Critical Steps
Kruh says there are six critical steps retailers need to understand and improve upon if they want to navigate the storm and avoid the same fate as the host of Canadian brick and mortar retailers who've closed their doors for good in recent years.
“Investing in these areas is only part of the equation,” notes Kruh. “Retailers also must have a clear understanding of where and how they’re investing so they can fully benefit from the connected-customer approach. Only then will they be able to deliver what consumers want.”
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Director, Corporate Communications
KPMG in Canada