How Canadian Consumers Differ from American, and Why It Matters
Ever since Target closed its Canadian stores in 2015, article after article has analyzed what exactly happened, from IT problems to supply chain mismanagement and more. From a marketing and sales perspective, however, there seems to be a misunderstanding of how Canadian and American consumers behave and what they value. Namely, that one is simply a northern extension of the other.
Nearly every company coming into Canada has experienced hurdles both in terms of regulation and consumer culture, especially if they treat Canada as a simple extension of the American market. The fact remains that Canadians consumers do spend and act differently than US consumers. If you understand those differences in Canadian consumer behaviour, however, you can enjoy a largely untapped and eager market that’s not only thriving but growing.
Here are a few insights into Canadian consumer habits and why that matters for anyone looking to conquer the north.
Canadians Under 40 Spend More
While Americans between 35-54 have more discretionary spending, Canadians under the age of 40 have substantially more to spend than their southern neighbours. This is good news for baby, toy and tech industries, whose major buyers are younger adults.
Canadians classified as “early career” have roughly $27,000 in discretionary spending per year, compared to Americans with roughly $20,000. When you look at young adults, the difference is even greater at $22,000 and $12,000 respectively.
While overall Canadians do spend less than Americans, breaking it down by age paints a completely different picture.
We Love Malls and are Slow to Buy Online
Maybe it’s because Amazon has been slow to roll out Prime and other features already in the States. Maybe it’s that Canadians want to get outside whenever they can, no matter the weather. Whatever it is, Canadians, love shopping malls and don’t shop online as much as Americans. This is even as we spend more time online than our southern neighbours.
While e-commerce rates are rising and some claim Canada is on the edge of an online shopping boom, the current rates sit at about two-thirds of Americans. Canadians are “touch-and-feel” buyers and value in-person experiences. Companies willing to create the right experience can make more of a lasting impression with Canadians, and can have more opportunities to turn curious shoppers into conversions.
Canadians Love a Deal
Everyone claims to love a bargain but Canadians have the numbers to back it up. Nearly 75% of respondents to a survey last year said they prefer discount outlets to luxury retail shops or even local stores, claiming that they prefer a deal to higher quality or supporting local. 57% of Canadians will also head to multiple stores to find the best price on the same product.
Our bargain-hunting nature was a fatal blow for Target once it opened. People quickly realized that Target in the US was cheaper than in Canada and more expensive than other Canadian big box stores. Target couldn’t break the stigma and Canadians went elsewhere for lower prices.
For companies looking to the north, it’s important to understand that price isn’t everything to Canadians. Value is. We don’t simply buy what’s cheapest, we do our research and purchase products that will save us money in the long run. Our research extends to a better understanding of prices in the US as well. Companies that charge substantially more in Canada than in the States, no matter the actual reason, can often be met with a stigma that’s impossible to overcome.
We Love Food (and Alcohol)
Overall, Canadians spend their money on the essentials more than anything else in their budgets. Food and drink, however, are where we’re willing to stretch our wallets. In fact, Canadians spend almost $1,200 more on food and drink per capita than Americans.
Size may be one of the reasons why Canadians spend more on food. 37 million people across the second-largest country in the world means that, on average, Canadians pay more for products simply because of transportation and infrastructure.
The reason may also be in how we approach food. A 2010 study by the Department of Agriculture and Agri-food stated that Canadians have a “you are what you eat” approach to food while Americans look at food as more fuel for the body. This means, in general, that Canadians consume more fresh produce and less packaged foods overall, meaning we are likely spending more money on quality food over cheap alternatives.
For alcohol sales, Canadians are spending more than ever. In Ontario alone, alcohol sales is an $8.1 billion industry, one that grew 3.9% from 2017 to 2018. Sales are up across the country, too, and show no end in dropping in sales, even with the legalization of cannabis in October of 2018.
We’re Growing Faster than the US
There are a number of factors involved in Canada’s population growth, which is consistently higher than in the US. We give birth less but welcome more immigrants, leading to a higher growth rate with a more diverse population as well. So while Canadians may not have the sheer numbers of the States, we are a market that is growing at a steady and healthy pace.
To Sum Things Up...
Canada and the US share many things in terms of consumer culture, which is why some companies like to use us as a testing ground but to make it in the north, you have to understand our differences. Understanding what we value and what we spend our money on, regardless of where the loonie is sitting, is key to making it in the north. The tundra, it turns out, it fertile ground.