A growing and increasingly diverse population presents both challenges and opportunities

Canadian cites are undergoing rapid demographic shifts that marketers will need to adapt to if they expect to connect with consumers. That’s the message emerging from the 2016 Census.

The latest round of data released by Statistics Canada reveals some of the country’s largest urban centres are undergoing a transformation that is proceeding at a pace unmatched among the world’s leading economies. Canada continues to be the fastest growing country in the G-7. And almost all of this growth is concentrated in large urban areas, particularly in Western Canada, while small towns and rural parts of the country are seeing their populations decline.

Just as the growth isn’t uniform across the country, growth within cities isn’t uniform either

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. The condo boom is driving growth in downtown districts, while expansion in nearby suburbs is slowing.

The suburbs are also aging faster than the downtown cores of these urban areas. Soon suburbia will no longer be dominated by young, child-rearing families. Increasingly, suburban living will be characterized by empty-nest couples and seniors choosing to live their later years close to family, friends and familiar services and amenities.

For marketers, this changing landscape has broad implications. As our large cities grow, tech-enabled services such as online grocery stores and transportation alternatives like Uber, car-sharing and bicycle-sharing will become even more popular.

The greying of suburbia may also increase demand for subscription services that deliver small indulgences like gourmet meals, big bags of pet food or whatever convenience an aging population might desire.

Follow the money

Overall, Canada’s population continues to get older. For the first time, seniors (65 and older) outnumbered children (0-14 years old), a result of Canada’s relatively low level of fertility. At the same time, aging Baby Boomers are further distorting the age pyramid. The population aged 55 and over grew by 35% between 2006 and 2016 compared to an eight per cent growth in the population under age 55.

While marketers traditionally have paid little attention to seniors, given they tend to have low incomes and fewer expenditures, the rapid growth in this cohorts’ spending power shouldn’t be ignored. The large and rapidly growing number of seniors led to a 56% increase in aggregate income (spending power) for the older population, compared to an increase of only 15% for the population younger than 55. Because this pattern will continue for several more decades, marketers and advertisers should follow the money and pay more attention to older consumers, many of whom have high incomes and substantial wealth.

As the older population grew in size over the period 2011 to 2016, the number of people aged 40 to 54 and 10 to 24 actually declined. Those 40 to 54 are members of the smaller “Baby Bust” population that followed the end of the Baby Boom, and their children are now aged 10 to 24. The decline in these populations means marketers will need to work harder just to maintain sales levels among these consumers.

Meet the new majority

As Canada ages, it is also becoming more diverse. Immigration accounted for two-thirds of population growth from 2011 to 2016, and culturally diverse populations grew in our large urban areas. In 2016, just over half of the population in the Toronto census metropolitan area considered themselves to be members of one of the 10 visible minority groups. In other words, the “minority” is now the majority in Toronto and the Vancouver area will soon follow that trend.

Of course, the nation’s largest urban areas have long been culturally diverse, but the Census found that patterns of immigrant settlement have shifted somewhat. From 2011 to 2016, fewer immigrants settled in Ontario and British Columbia and more moved to the Prairie Provinces and even Atlantic Canada. This new migration pattern means many medium-sized urban areas becoming more culturally diverse.

With Canada’s population increasingly drawn from many parts of the world, understanding the different needs and preferences of these consumers is essential. The way consumers hear and interpret messages may be shaped by their past, and marketers will need to consider these influences while evaluating the overall size of Canada’s visible minority population and the diversity of the groups within those populations.

Develop a multicultural strategy

In developing a multicultural strategy, the first challenge is determining what percentage of the current customer base consists of which various visible minorities. Choosing the target population of interest is also important. For example, should the focus be on the entire group or only more recent immigrants? Should the second generation be included? Should temporary residents be included?

And the questions don’t end there. Within a visible minority group, there may be several distinct populations. For example, should a broad category like South Asian or Latin American consumers be further divided based on countries or languages of origin? Should the focus be on Chinese populations from Hong Kong and China or those who speak Mandarin or Cantonese? The decision on what groups to focus on depends in part on the extent to which factors such as values, media and consumer behaviour are distinct among these sub-groups.

Another important question concerns which language to use when communicating messages and placing ads in so-called ethnic media. The Census provides a rich array of data on a number of different language dimensions, including mother tongue, language spoken most often at home, other languages spoken regularly at home and knowledge of languages. And marketers should keep in mind that knowledge and use of English and French vary widely in these groups. A related question is the extent to which various groups consume ethnic media.

Appeal to the home alone crowd

In addition to the age and relative size of population groups and immigration trends, household composition affects demand for products and services. Today over 60% of households contain one or two people, and approximately equal numbers of households are made up of people living alone, couples with children and couples without children. Families are also increasingly diverse as reflected in the increasing number of same-sex couples and step families. All of these population segments have different product needs and preferences that touch virtually all industries.

Success in the housing industry has always required a clear-eyed assessment of population changes. The ageing population and the related changes in household size and mix have resulted in shifts in the types of dwellings constructed—more rental and condo apartments—and much more change is ahead. Homebuilders and renovators need to better understand the preferences of seniors today, whose tastes may be very different from the seniors of yesterday.

As Boomers age, some will begin downsizing and choose apartment and condo living. Others may prefer adults-only communities close to amenities. Innovative homebuilders can show leadership in developing new housing alternatives that allow the older population to age in place and remain in their communities where they can be close to family and friends. This is a particular challenge in the changing suburbs.

Capitalize on new opportunities

Assisted living residences for seniors will also likely attract increased attention as health problems become more common among aging Canadians and their ability to live independently wanes. Older, empty-nest couples and singles who choose to remain in their home will likely continue to fuel demand for home remodeling services. And as these men and women settle in to their newly renovated lifestyle, there may be many opportunities for gift shops that offer tableware, decorative items and other “nice-to-have” flourishes that were out of reach of their budgets when they were raising a young family.

Seniors who remain living in their local communities rather than move to much more expensive health care facilities will also have a greater need for home care services. The shifts in housing requirements and mobility limitations will spawn additional consumer needs that astute marketers in all industries—from grocery stores and entertainment venues to home furnishings and healthcare—should be looking to meet with targeted offers and tailored services.

Recognize the marketing ramifications

Increasing diversity presents both opportunities and challenges, and marketers should be sensitive to the new dynamics at play. Their ability to identify smaller niche markets is becoming more critical to success. Segmentation tools that capture the shift in household profiles will help them understand the real-world lives of their customers, not the idealized view from decades ago.

Now more than ever, accurate data is vital for a range of applications—target marketing, customer insights, media planning, site location studies, response analysis—that can help marketers connect with consumers and turn them into loyal customers.

 

This article originally appeared in the November 2017 issue of Direct Marketing.

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Doug Norris

One of Canada’s leading experts on the Census, Doug Norris, Ph.D., is a senior vice president and chief demographer at Environics Analytics. He joined EA in 2006 after nearly 30 years with Statistics Canada, where he served as director general of social and demographic statistics.

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