- Majority of consumer respondents (94%) concerned about rising living costs
- Concerns for health rise seven percentage points
- Data reveals eroding consumer trust in retailers and consumer products companies
16 May 2023 London, GB Consumers globally continue to reign in their spending amidst a challenging cost-of-living environment, with 94% of consumers now worried about the rise of living costs as they continue to navigate inflation.
Affordability is now the leading concern for 35% of consumer respondents globally, the 12th edition of the EY Future Consumer Index (FCI), reveals, increasing 10 percentage points since October 2022 and remaining the largest consumer segment.
The data also reveals that people in both developed and emerging countries are making dramatic, short-term lifestyle changes to cope with ongoing disruption. Out of the five consumer segments – “planet first,” “experience first,” “society first,” “health first” and “affordability first”– “planet first” saw the biggest decrease (-9 percentage points, from 25% to 16%) reaffirming the switch consumer respondents are making to prioritize affordability, now seeing sustainability as less of a concern.
Notably, the data reveals the health first consumer group increased by 7 percentage points (from 17% to 24%) since October 2022 to become the second largest segment behind affordability for the first time since May 2021. This significant increase indicates consumers are focusing on short-term lifestyle changes and reprioritizing individual needs over collective efforts, focusing on their own finances, health and stress levels. China’s planet first group also dropped 17 percentage points (from 35% to 18%) as affordability concerns rose 14%.
Consumers turn away from brands in search of affordability
With today’s economic uncertainties showing no signs of easing, 92% of respondents are concerned with their country’s economy and 39% expect the situation to get worse over the next six months. Consumer respondents are taking action to reduce spending in many areas of their lives, with more than a third (36%) planning to spend less on clothes, 44% expecting to buy less take-away food and nearly half (49%) planning only to spend on essential products. Affording the essentials also remains a challenge for many consumer respondents. More than three quarters (79%) feel prices for food have increased in the past three to four months and 74% have noticed some brands have reduced their pack sizes without reflecting changes in the price, otherwise known as “shrinkflation”.
The data indicates brands are no longer the only way to communicate status for the majority of consumers as 62% of respondents globally don’t feel the need to keep up with the latest fashion trends and half would now consider private label for clothing, shoes and accessories. A large proportion (67%) now prefer to repair rather than replace their possessions, challenging the traditional consumer desire of having to always own the latest things. 55% of consumers globally say brands are no longer important.
Kristina Rogers, EY Global Consumer Leader, says:
“Consumers are remaining frugal and resilient to cope with cost-of-living pressures, leaving them no choice but to draw on lessons learned from the global pandemic. They are seeing the value they receive from brands diminish due to price increases and shrinkflation. Consumers are responding by switching away from brands, reducing their list of essentials and canceling subscriptions to maximize their budgets. With trust in retailers and consumer products businesses eroding across the board, (-7 percentage points for supermarkets since Feb. 2021), businesses must be prepared to accept that decisions they make now could have long-term implications on consumer loyalty and brands will need to double down on innovation and marketing efforts to compete.”
Technology is intrinsically part of consumer life
The EY Future Consumer Index reveals almost half of (46%) consumer respondents rely on technology to manage their daily lives. This growing reliance on technology and its outputs and recommendations are also shaping purchase decisions and overall consumption. Across mainstream technologies, the data reveals almost half of consumer respondents (46%) have used online grocery delivery services in the last three months, a 12-percentage point rise since June 2022. Fifty-three percent of respondents have socialized with friends and family over video platforms, a significant 14 percentage point rise since June 2022, and 62% now listen to audio streams, a huge 17 percentage point increase from June 2022. Emerging technologies also saw a sharp uptake, with more than double the number of consumer respondents globally now using virtual multi-user platforms when compared with June 2022. Notably, 66% of respondents said they are willing to share their data in exchange for cheaper alternatives.
Rogers says: “Consumers have become habitual users of digital technology, becoming incrementally more reliant on it to provide them with ways to make life easier, save money, save time, work from home and reduce their environmental impact. Consumer attitudes toward technology are evolving just as rapidly as the technology itself, as people look for a fair exchange of value. Businesses must foster a relationship with their customers around technology based on trust, respect and value. Failure to do so will damage relationships in the long term.”
