June 24, 2022 by Speakers' Spotlight
The Shortage Economy and What it Means for Leaders
Supply chain disruptions, empty shelves, rising prices, labour shortages — the shortage economy has been dominating the headlines lately, with no end in sight and potentially long-term effects. What does it mean for your organization and industry as a whole? Public opinion and social researcher David Coletto has the answers.
A founding partner and the CEO of Abacus data, David is an industry leader in marketing research. He recently conducted a national survey of Canadian adults exploring the economic and social impact of the shortage economy across Canada. He wanted to answer two questions — how Canadians are experiencing the shortage economy and what it mean for leaders. Here’s what he found out.
It’s a Challenging Time to Lead
David tackled the shortage economy from two different angles — supply chain disruptions, empty shelves, and rising prices as well as labour shortages and worker fatigue/burnout. Overall, the data spelled out that this is a very challenging environment to lead in. Here’s why from an employee, consumer, and political viewpoint:
- We need to learn how to do more with less, David writes, yet also also recognize that employees and workers are empowered (even if they don’t know it yet) and are coming to work with a different frame of mind. Many are tired, burned out, and looking for real meaning in their work.
- The customer experience has changed. Labour and product shortages mean wait times are longer and full of friction far more than people have come to expect. The rapid shift to e-commerce has left many brick-and-mortar retailers and service providers are struggling to keep up.
- We are moving more sharply into the politics of inflation, where public concerns focusing on the cost of living and the ability of political leaders to deliver relief are juxtaposed with budget deficits and fears of stoking inflation even more.
Let’s dive deeper.
The Shortage Economy: The Labour Market
Although the Great Resignation has taken hold in the United States, it hasn’t had the same effect in Canada, David writes. In fact, Statistics Canada’s Labour Force Survey found that the number of Canadians leaving their jobs voluntarily due to dissatisfaction is much lower than it was at the start of the pandemic.
Through David’s poll, he learned that just 18% of employed Canadians have changed jobs in the past 12 months. More interestingly, David writes, is the reason why people left with more than 60% of job changers saying they “needed a change — the work they were doing wasn’t interesting”. In younger workers, money also played a factor, David writes, as well as increased flexibility.
In addition, David learned that 1 in 3 Canadians are feeling burned out — that’s about 10 million people. This survey was conducted just after the holiday season in January 2022 when many would have had the opportunity to rest and recharge, yet burnout continues to rise. David said this is a big indication that the Great Resignation could still makes its way to Canada any day now.
The Shortage Economy: Consumers
Supply chains took a severe hit throughout the pandemic. Almost half of Canadians say they couldn’t get a product they wanted in the past 12 months, David writes, with 84% saying this is happening more often than usual.
When faced with an empty shelf, David continued, 35% reported that they bought a different brand of the same product, 39% ordered the product and waited, and 27% didn’t buy the product at all. All of this equates to the consumer experience being disrupted, he continued, meaning consumers are left dissatisfied with a brand and/or retailer.
This lack of supply didn’t just affect consumer satisfaction though, David said, it also saw a rise in costs. The cost of living is rising faster than it has in three decades, with many Canadians reporting that their income is not keeping up. Only 1 in 4 Canadians say their household income has increased in the past year, David writes, while a similar proportion feel their incomes have actually decreased.
On the flipside, Canadian consumers are still satisfied with the level of customer service from brands and retailers. For the most part, David writes, Canadians feel that service quality has stayed the same with the exception of airlines, government departments, and restaurants, which worsened, and e-commerce, which improved. David writes:
There’s a lot to unpack in these numbers but for me what stands out is that businesses who have faced labour shortages and severe changes to the overall experience (think restaurants and airlines) are seen as weaker while e-commerce and online retailers have been able to improve on the experience overall. This means that the acceleration in e-commerce use over the course of the pandemic may stick around, as consumers met an improving experience while brick-and-mortar retailers were static and constrained by capacity restrictions, social distancing, and other COVID-created challenges.
How Can Leaders Respond?
The shortage economy is here, whether we like it or not, David writes. While the Great Resignation hasn’t hit Canada to the same degree as the US, it’s on the horizon and Canadian workers, especially younger workers, are more powerful than they have been in some time.
People are looking to be fulfilled at work and they are demanding that their employers care, David writes. It’s more important now than ever for leaders to lead with compassion and engage regularly with their teams to address their needs and demonstrate that they’re listening.
Secondly, David writes, all businesses, no matter the industry, need to approach customer service with a hospitality mindset. With supply chain disruptions, your organization is likely selling to consumers who are being asked to spend more for less, so improving their customer experience is crucial.
Interested in learning more about the shortage economy and what it could mean for your organization and industry as a whole? David’s new keynote “Navigating the Shortage Economy: Opportunities and Challenges for Leaders” dives deep into today’s economic reality to help audiences best strategize and prepare for the opportunities and challenges ahead.
With extensive research on this topic, Coletto tailors his keynote for each of his audiences and their respective industries. Email us at [email protected] to learn more.