Back-to-school spending is forecast to increase 4.5% in Canada, driven by lower gas prices, a stable but low Canadian dollar, and the new Canada Child Benefit program, according to EY (Ernst & Young).
The professional services firm said B.C. would lead back-to-school retail sales, with strong results expected in Ontario as well. Sales in Quebec and the Atlantic provinces are expected to be in line with the national average, while the Prairies are forecast to be below the national average. Alberta sales are not expected to grow.
“As we did last year, we expect less cross-border shopping, given the low Canadian dollar,” said Daniel Baer, partner and national retail and consumer products leader at EY. In addition, “there’s more money going into the system for child benefits, so that gives more liquidity to parents, in particular those who might have [less] disposable income.”
As retailers gear up for the second biggest shopping season behind Christmas, EY said retailers would win their share of the spending pie by targeting not just parents, but Gen Z.
Last year, EY released a report on how Gen Z—which the firm defined as people born after 1997—is changing the retail game.
“What we found is that they are a different consumer,” said Baer. “Given their age, they don’t have a lot of disposable income. But, we do find they have a big influence over the buying decisions of their parents. Especially in the back-to-school season where most of the purchasing is for the Gen Z generation, we think retailers need to understand what Gen Z wants, how they act and how they buy.”
According to EY’s U.S. survey, 49% of Gen Z are shopping online at least once a month—a number that will skyrocket once they get credit cards.
Gen Z is most likely to buy online for “efficiency purposes,” according to the report. Sixty-three per cent of Gen Z said they shop online to save time, compared to 55% of millennials; 53% of Gen Z said the selection was better online compared to 44% of millennials; and 34% of Gen Z said the products were organized in a way that’s easier to shop, compared to 21% of millennials.
Gen Z also values free delivery, said Baer. “Certainly other generations value free delivery, but they’re more apt to order online and pick up in store… Gen Z really wants that free delivery to their door. They don’t necessarily want to go to the physical store to engage.”
On the marketing front, Baer said retailers should invest in social media strategies, since platforms like Instagram and YouTube, as well as bloggers, are effective ways to reach Gen Z. “Our study also found that they don’t necessarily react to celebrity,” said Baer. “They take advice from people either that they know, or their peers.”
Gen Z is also known to have relatively short attention spans. “To attract them, you need to be very quick, so a 60-second TV ad isn’t going to do much for them,” said Baer. “An eight- to 10-second ad probably will connect.”
Baer added that retailers needed to have a “consumer-oriented strategy, not a channel-oriented strategy,” as in-store, mobile and online are all important channels for Gen Z. “You need to make sure that your delivery is seamless, whether in store, deskop, mobile or tablet,” he said.
