A new report from technology company Square found Canadian retailers and restaurateurs are optimistic about the year ahead despite economic uncertainties. Even amid high inflation and a potential recession, businesses are eager to adopt new strategies and solutions to retain and attract customers as outlined in the 2023 Future of Commerce report.
In collaboration with Wakefield Research, Square’s survey sourced data from retailers, restaurateurs and consumers across Canada and the United States. For retailers, Gen Z is becoming increasingly important, with Canadians born between 1997 and 2012 playing a big role in shaping the way sellers operate and market their businesses. So great is Gen Z’s influence that more than half (53%) of Canadian retailers are devising entirely separate marketing approaches to target these younger customers.
For restaurants, 2023 is all about diversification, with a vast majority (89%) planning to expand their non-core products and services, such as selling retail goods and meal kits or offering cooking classes.
“Square’s ecosystem has evolved to help our sellers evolve. We know it’s critical for sellers to diversify their revenue streams and it’s fantastic to see so many businesses already expanding their offerings and exploring new sales options,” said Alyssa Henry, Head of Square. “Our report makes it clear that ‘proactivity’ is the name of the game this year, with Canadian restaurateurs and retailers moving full speed ahead to implement new sales channels and technology to improve consumers’ experiences in 2023 and beyond.”
Canadian retailers selling both online and in-store currently offer customers an average of five sales channels, and 85% of all Canadian retailers are planning to add even more commerce channels in 2023. “Buy Now Pay Later” options like Afterpay are now well established in Canada, with 39% of retailers offering these solutions. Additionally, more retailers are selling products and services through social media: 72% of retailers with online sales sell through Facebook, up from 65% a year ago. Instagram is the second most popular social media site for selling, with 65% of retailers allowing customers to purchase through the platform, up from 55% last year.
In-store selling is also seeing a swift post-pandemic resurgence, with Canadian retailers seeking ways to improve the brick-and-mortar experience. Forty-three per cent either use or are planning to introduce QR codes in-store to provide customers with additional product information and promotions. Virtual Reality (VR) offers another dimension to in-store commerce, with 37% of retailers adding VR, augmented reality or interactive kiosks to stores, perhaps in an effort to connect with the coveted Gen Z demographic.
Additionally, more than one-in-three retailers (37%) plan to have special pop-up showrooms to highlight items, and the same number are implementing in-store events like DIY classes and tastings. Ultimately, retailers are looking into adding unique offerings, with 41% saying they believe they need to add more one-of-a-kind products to better compete.
As the competition gets stiffer, restaurants are increasingly moving into the retail arena. Sixty-five per cent of restaurateurs say non-core products and services are necessary to diversify their revenue and grow the brand, with retail playing a large role. Over half (54%) of Canadian consumers have purchased retail items in restaurants in the past year, up from 49% last year.
But one thing restaurateurs are very reluctant to do is to raise prices, with only 27% planning this step in 2023 to weather an economic recession. For their part, Canadian consumers would be okay with modest price hikes, with 85% saying they would be understanding if businesses did so. Sixty-six per cent of restaurateurs are not planning layoffs or holding off on filling open positions to weather a potential recession, indicating the lasting effects of the post-pandemic hiring market, where many businesses struggled to hire workers back.
“After surviving the past two years, businesses are playing the long game and taking a much more bullish approach to expansion and innovation,” said Roshan Jhunja, Head of Retail at Square. “As retailers and restaurants look ahead to the next year, they’re open to offering more products, services and conveniences, which will no doubt benefit consumers and businesses alike well beyond 2023.”
The full Future of Retail and Future of Restaurants reports can be found here.
Square offers software to run restaurants and retail operations with e-commerce tools, embedded financial services, buy now, pay later functionality through Afterpay, an appointment booking platform, staff management and payroll capabilities.
The consumer survey was conducted by Wakefield Research among 2,000 nationally representative Canadian and U.S. adults ages 18+ between November 15 and November 28, 2022, using an email invitation and an online survey.
The retail survey was conducted by Wakefield Research among 500 Canadian and 500 U.S. Retail Owners & Managers between November 15 and November 28, 2022, using an email invitation and an online survey.