A new survey suggests that nearly half of store owners plan to lower prices this year in order to retain customers.
- Michelle DiPardo for Marketing || June 4, 2014
Nearly half of Canadian retailers (48%), plan on dropping prices this year to retain customers, according to the Canadian Retail Insights Report, released Tuesday by American Express Canada.
The findings represent a dramatic increase from the original study conducted two years ago, which found that only 35% of those surveyed would reduce prices to promote loyalty.
The report—which surveyed 375 Canadian businesses in the gas, grocery, pharmacy, restaurant, fast food, apparel and general retail sectors—focuses on what's top of mind for Canadian merchants, including their industry and business outlook, challenges, growth strategy, and customer loyalty and acquisition.
"Canadian merchants are clearly serious about cultivating and maintaining customer loyalty, and they're reducing prices to get them in the door," said Jennifer Hawkins, vice-president and general manager of merchant services, American Express Canada, in a release. "As a result, I expect we'll see increased competition among retailers across all verticals as they fight to retain and reach new customers."
Across verticals, the report revealed that beyond simply slashing prices, 83% of Canadian businesses will offer sales, promotions or discounts as the top strategy to promote customer loyalty, with general retail, apparel and grocery ranking highest.
Canadian businesses are split when it comes to focusing on either acquisition or retention as their key business strategy. Gas, fast food, and general retail are all working on reaching new customers, and pharmacy and grocery are putting their efforts into retaining current customers.
Customer service continues to be of vital importance for all sectors, with 89% of retailers agreeing they need to put more attention into customer service.
The acceptance and use of new technologies in retail continues to grow with 72% of Canadian businesses agreeing that e-commerce is helping their company attract a new type of customer, with the general retail and apparel sector driving growth, ranking it a top priority for the year ahead.
Commissioned by American Express Canada and conducted by Nielsen, the survey was conducted between March 17 and April 3, 2014.
This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 4 partners specialize in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.