Canadian Consumers More and More Prefer to Shop OnlineCanadian consumers more and more prefer to shop online

Online shopping was the winner this 2015 holiday retail season, according to a report that says many traditional retailers will have to up their game in order to prevent Amazon and eBay from siphoning away sales in the future.

 

 

 

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“E-commerce is becoming a more preferred shopping channel among Canadians as these digital platforms offer comfort and convenience for shoppers,” said BMO Capital Markets analyst Peter Sklar, who compared the share of Canadian Web visits during the holidays between online-only retailers and bricks-and-mortar retailers with online divisions, such as Canadian Tire and Walmart.

E-commerce platforms of the publicly traded Canadian bricks-and-mortar retailers, such as Canadian Tire and Rona, continue to represent an immaterial share of Canadian web visits during this past holiday season relative to Amazon, Walmart, and eBay,” Sklar noted.

Broader data also confirm that the holiday 2015 period was robust for online retail. November and December 2015 were record-breaking months for online sales in Canada, according to MasterCard SpendingPulse, which tracks consumer payments and estimates for credit, debit, cash and cheques. Online sales accounted for 9.7 per cent of total retail sales in the two-month period, the highest watermark yet for Web sales in Canada. In December, online sales accounted for to 9.9 per cent of total retail sales, up from 8.6 per cent in 2014

 

 

YEAR

Retail

Online Retail

Share %

e-Shoppers

2012

317bn

18.4bn

5.8%

18.8mn

2013

323bn

21.3bn

6.5%

19.5mn

2014

332bn

25.3bn

7.6%

20.2mn

2015

343bn

29.6bn

8.6%

20.9mn

2016 (f)

355bn

34bn

9.5%

21.5mn

 

Amazon has nearly 24 per cent of Canada’s ecommerce industry, while the Canadian company Indigo has a market share of 1.5 per cent.

“If the U.S. retail giants are the Goliath of the online industry, Canadian retailers are playing the part of David. Most Canadian independents don’t have a website, let alone ecommerce capabilities,” the report stated, noting a 2014 study by the Retail Council of Canada found 61 per cent of independent retailers had no online presence at all. The poll, which was conducted in advance of the holiday shopping season, noted last year 68 per cent of British Columbians opted to skip store line-ups and the trouble of finding parking and shop online for their holiday gifts. This was up significantly from 19 per cent in 2013.

Smaller businesses should work on building an online presence. That lack of an online presence was an important finding (from the report). If you are not getting much sales online, there could be a possibility of job loss and stores closing. Retailers have to come up with a better strategy to link bricks-and-mortar and online,” said Bergeron.

In light of the online shopping trend, the report suggested city planners should anticipate falling demand for retail space and consider new ways to animate main streets and think of repurposing some retail buildings. The average amount that Canadians will spend online shopping is expected to increase by 50 per cent between 2014 and 2019.

The growth of Canadian ecommerce sales in 2015 is estimated at around 17 per cent compared to 2014. Overall Canadian retail sales growth, excluding automotive and gasoline, was two per cent year over year over the holidays, MasterCard noted.

As we see around the globe mobile is boosting online shopping. According to a recent retail forecast from The Centre for Retail research, online shopping via mobile device (tablets and smartphones) will have increased to 16.2% in 2015, up from 11.3% in 2014. The number of Canadians using their mobile phone as part of an omni-channel experience or for product research is significantly higher. Canadian retailers could land the sale if they make it easy and tempting to do so.

In Canada, cross-border shopping has long been popular—with US retailers garnering most of those sales. A significant proportion (45%) of ecommerce spending goes to non-Canadian websites; 45% goes towards purchases from non-Canadian websites. One-third of the total is spent, of which one-third is spent in the US and the rest in Asia and Europe.

Shopping overseas is mainly driven by lower prices and better selection in other markets.

But as the value of the Canadian dollar has declined[1], buying items from abroad might become les attractive to some experts.

IORMA News – March 2016



[1] the average rate of exchange of the Canadian Dollar against the US Dollar went down from 0.9995 in 2012 to 1.2791 in 2015