Canadian retailers drop prices to retain customers

American Express study finds that maintaining and expanding customer base trumps increasing sales for Canadian retailers, a shift in mindset since 2012

MARKHAM, ON, June 3, 2014 /CNW/ - The Canadian Retail Insights Report, released today by American Express, reveals that retailers across industries nationwide plan to place more of their focus on dropping prices this year to retain customers. In 2012, the Insights Report revealed that only 35 per cent of those surveyed would reduce prices to promote loyalty; this year 48 per cent say they will - a dramatic increase from the original study conducted two years ago.

Surveying decision makers in the Gas, Grocery, Pharmacy, Restaurant, Fast Food, Apparel and General Retail sectors, the Report focuses on what's top of mind for Canadian merchants, including their industry and business outlook; challenges and pain points; growth strategy; customer loyalty and acquisition; competition; and strategies for attracting customers.

Across verticals, the Report shows that beyond simply slashing prices, 83 per cent of Canadian businesses will offer sales, promotions or discounts as the top strategy to promote customer loyalty, with General Retail (89%), Apparel (86%) and Grocery (85%) ranking highest. Fast Food is the only industry surveyed that plans to invest in improving customer service (92%) as its top strategy for the next 12 months, slightly ahead of dropping prices.

"Canadian merchants are clearly serious about cultivating and maintaining customer loyalty, and they're reducing prices to get them in the door," says Jennifer Hawkins, Vice President and General Manager of Merchant Services, American Express Canada. "As a result, I expect we'll see increased competition among retailers across all verticals as they fight to retain and reach new customers."

Verticals split on key business focus
Canadian businesses are split when it comes to focusing on either acquisition or retention as their key business strategy and focus for the year, depending on vertical. Gas, Fast Food, and General Retail are all focused on reaching new customers; whereas Pharmacy and Grocery are putting their efforts behind keeping current customers. And while the Apparel sector is weighing new customer wins slightly more heavily than maintaining current customers, as a vertical it is also putting an increased focus on keeping current customers happy (a 14 percentage point increase over 2012).

Customer service also continues to be vital for all sectors, with 89 per cent of retailers agreeing they need to put more focus on customer service (increased from 2012 by 6 percentage points). As a result, 77 per cent of retailers report they will invest in improving customer service this year.

"The competitive landscape seems to have drawn a distinct division between verticals in terms of how they're focusing their efforts," says Hawkins. "But what I find really interesting is that regardless of whether they're going after net new customers or they're working to retain their current customer base, retailers across the board are focusing on customer service."

Technology in retail on the rise
Although not relevant for every industry, the acceptance and use of new technologies in retail continues to grow with over half of businesses (51%) agreeing that consumers are switching their purchasing behaviour online. Seventy two per cent of Canadian businesses that offer online shopping agree that online shopping is helping their company attract a new type of customer;  the General Retail (50%) and Apparel Sectors (37%) driving e-commerce growth, ranking it as a top priority for the year ahead. The Report makes it clear that mobile technology is still in its early stages of adoption in Canada, with only one in ten (12%) retailers surveyed claiming that their online sales come from mobile transactions.

Optimism Remains High
Most Canadian verticals noted competition in their industry, both new (62%) and existing (65%), as their top concern. However, this year's Report sees Canadian Business owners' optimism remaining consistently positive for both their industry (76%) and their own business (83%).

"Despite the ever-present concern over competitors, it's encouraging to see that optimism isn't flagging for Canadian Business owners. Canada continues to be a great place to run a business," says Hawkins.

About the American Express Retail Insights Report
The study was commissioned by American Express Canada and conducted by Nielsen. The survey was conducted between March 17, 2014 and April 3, 2014 and involved a national telephone survey of 375 Canadian businesses. A sample of this size carries a margin of error of +/- 5.1%, 19 times out of 20.

About American Express Canada
American Express in Canada operates as Amex Bank of Canada and Amex Canada Inc. Both are wholly owned subsidiaries of the New York based American Express Travel Related Services Company, Inc., the largest operating unit of the American Express Company. Amex Bank of Canada is the issuer of American Express charge and credit cards, with outstanding products like the American Express® Gold Rewards Card, and the American Express® AeroplanPlus® Gold Card. Amex Canada Inc. operates the Corporate Travel and Travellers Cheques divisions in Canada. American Express opened its first offices in Toronto and Hamilton in 1853 and now employs 3,700 Canadians coast-to-coast. For more information, visit or connect with us at

SOURCE: American Express

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Kate Weersink
High Road

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