Hello digital revolution, goodbye "Canopolies"

In a market obsessed with customer-centricity the Canadian oligopolies are increasingly vulnerable. Year over year the companies comprising Canada’s banking, telecommunications and grocery oligopolies, or “Canopolies” to quote a colleague, earn billions in profit. Compared with their peers around the world, these businesses charge their customers extremely high rates despite a relative lack of customer-focused innovation.

Last week I wrote an article suggesting that the market pressures acting on the Canadian banks are not high enough to force them to innovate for their customers faster than their Big 6 counterparts. In other words, one bank won’t forge ahead of another for the sake of the customer’s experience. But, just because intra-industry competition has been dampened by complacency doesn’t mean that the “Canopolies” will remain safe from interindustry rivalry.

In PWC’s publication Insurance 2020: The digital prize – taking customer connection to a new level” 15% of subjects surveyed would consider buying an insurance policy from a major retail brand and 5% from a social network. Car insurance from Facebook?! Everyone I’ve talked to from the LCBO cashier to my Uncle Dave is talking about Amazon Go, the new cashier-less grocery store. Even Sears announced that it will be launching a new grocery strategy to encourage more frequent store visits. While Sear’s is not winning a prize for business success and innovation anytime soon, what about Amazon?

In their book Platform Revolution Parker et al. share that despite focusing on their cash cows and profits, incumbents like Canada’s banks, grocers and telecoms have the resources to disrupt and usually opt not to. This is far from the case for companies like Amazon. Amazon is number 44 on the Fortune 500 and yet they still think and act like a start-up, disrupting the market continuously. Why is it that they get it right over and over again? I will argue that a major part of Amazon’s success is making the transaction effortless for customers by prioritizing their digital experience. 

So if customer loyalty is at an all-time low, Canadians are considering buying insurance from Facebook and groceries from Amazon, have we seen the beginning of the end of the complacent Canopolies? Either way, thanks to a competitive market, Canadian consumers can expect rapidly enhanced digital experiences from new players or from innovation from the old dogs. The future looks good.

Make it a great week!