Consumers worldwide continue to cut back on spending as they try to cope with the challenges of inflation, with 94% of respondents to an Ernst & Young (EY) survey concerned about the rising cost of living.
According to the 12th edition of the global survey, EY Future Consumer Index (FCI), affordability is now the main concern for 35% of consumers in the countries sampled. This percentage is increased by 10 percentage points compared to October 2022 and remains the largest segment of the consumer public.
The survey data also reveals that consumers in both developed and emerging economies are making dramatic, short-term lifestyle changes to cope with the ongoing upheavals in their daily lives. Of the five consumer typologies, the group of those who prioritize the environment (Planet First) saw the largest decrease, from 25% to 16%, confirming a consumer shift towards affordability.
Interestingly, the Health First (Health First) group of consumers has grown by seven percentage points (from 17% to 24%) since October 2022, and is now the second largest typology behind those who focus on affordability of prices (Affordability First). This significant increase shows that consumers are focusing on short-term lifestyle changes and are now prioritizing individual needs over collective efforts, focusing on their personal finances, health and stress levels.
Consumers are moving away from brands
As today’s economic uncertainty does not seem to be abating, 92% of respondents are worried about their country’s economy, while 39% expect the situation to worsen over the next six months. Consumers surveyed are mobilizing to cut spending in many areas of their lives, with more than a third (36%) planning to spend less on clothing, 44% expecting to buy less takeaway food, and nearly half (49%) plan to spend only on essentials. Access to basic goods is still a challenge for many of the consumers. More than three-quarters (79%) globally believe food prices have risen in the past three to four months, while three-in-four (74%) noted that some brands have reduced their pack sizes without reflecting the changes in price – a practice that has become known as ‘shrinkflation’.
The survey reveals that, for the majority of consumers, brands are no longer the only way to project their social status, as 62% of respondents worldwide do not feel the need to follow the latest fashion trends, while half are willing to consider private label products for apparel, footwear and accessories. A large proportion (67%) now prefer to repair rather than replace their possessions, moving away from the traditional consumer trend towards the newest and latest products. 55% of consumers worldwide say that brands are no longer important.
Technology is now an integral part of life
The survey reveals that nearly half (46%) of consumers rely on technology to manage their daily lives. This growing reliance on technology is also shaping purchasing decisions and overall consumption. The data shows that nearly half of consumers surveyed (46%) have used online delivery services for groceries in the past three months, an increase of 12 percentage points since June 2022. 53% of respondents have develop social contacts with their friends and family through video platforms, a significant increase of 14 percentage points from June 2022, while 62% listen to music online, a huge increase of 17 percentage points in the same period. Penetration of emerging technologies also increased dramatically, with the number of consumers worldwide who responded that they now use virtual multi-user platforms more than doubling compared to June 2022.
Notably, 66% of respondents said they are willing to share their data in exchange for cheaper alternatives.
As the cost of living around the world continues to rise, trust and loyalty to brands decreases, and consumers turn to cheaper alternatives. At the same time, it is confirmed that technology plays an increasingly important role in consumer behaviors, while health concerns, including mental health, seem to be intensifying again. Businesses should cultivate a relationship of trust and respect with their customers, and offer affordable alternatives, while relying on innovation and technology, to support the changing needs of consumers, in a fluid period of change and economic challenges.
