Growing economic uncertainty and rising costs undermine post-pandemic hopes
– 52% of consumers say rising costs affect their ability to purchase goods
– Consumers are prioritizing “experiences” over buying physical goods
– 42% of respondents will only buy brands that match their values
LONDON, March 17, 2022 /PRNewswire/ — The glimmer of hope for a shift to a more consumer-positive post-pandemic world has been hit by growing economic uncertainties in recent months, once again lowering consumer confidence, according to the latest EY Future Consumer Index.
The ninth edition of the quarterly global consumer survey of 18,000 consumers, conducted in February 2022finds that the rising cost of goods and services is impacting the ability of 52% of respondents globally to buy goods and affecting their buying decisions.
While inevitably this affects low-income people the most (62%), the survey shows middle-income (48%) and high-income (42%) people are also under pressure. Emerging markets are feeling the pinch hard, with 62% citing affordability affecting their choices (South Africa 77%, India 64%, Brazil 63%, China 42%), compared to 45% of respondents from developed markets (50% from the United States, Canada 52%, UK 42%, France 40%).
Driven largely by the inflationary impact on prices and the anticipation of new variants of COVID-19, the survey shows that consumers will continue to control their consumption, opt for cheaper alternatives and buy fewer products. not essential. Some key items that respondents are spending less on include clothing (38%), beauty and cosmetics (35%) and alcohol (30%). Many are already looking for cheaper alternatives for fresh food (20%) and packaged food (19%).
Uncertainty around managing the rising cost of living leads nearly two-thirds (60%) of all respondents to want to save more for the future, with 39% of all respondents having already set a goal to save more for the future. save rather than spend. The biggest savers are in South Africa (56% of all countries surveyed), Indonesia (54%) and Mexico, Brazil and Argentina (all at 51%).
Kristina RogersEY Global Consumer Leader, says:
“Despite an economic recovery in many countries since the pandemic, consumers are not optimistic about their future due to rising inflation, fundamental changes in their work and personal lives, and growing unease. around current global geopolitical issues.
“With their purchasing power eroding and uncertainties looming, consumers need to rethink their spending choices, not just around ‘nice-to-have’ purchases, but everyday essentials as well.”
Experiences rather than “things” drive spending
Survey shows consumers are looking for experiences more than ever as they make up for lost time and seek escape from the pressures of the post-COVID-19 world, with 45% saying they plan to live more in the moment.
Of the top five spending priorities – planet first, affordability first, experience first, health first and society first – experience saw the biggest increase, doubling in priority since 2020 and is now the third highest priority when consumers decide where to spend, having been the smallest at the start of the pandemic.
Experience is now the highest priority segment in the US (24%), France (26%), India (31%) and Thailand (32%). It remains the smallest segment of Finland (13%), Australia (15%) and New Zealand (ten%). Forty-two percent of all respondents plan to spend more money on experiences in the next year. However, 39% are less likely to get involved in experiences outside of their home, so the experience has to come to them. Shoppers venturing out demand more from brick-and-mortar stores, with more than a third (36%) planning to only visit stores that provide a great experience.
Rogers says, “Customers are getting harder to reach and the power is shifting from the brand to the consumer. Consumers initially turned from buying to spending on experiences out of necessity, but now they see it as an active choice. The types of experiences that will appeal most to consumers are easy to access and require minimal time investment. ‘do’, whether through custom in-store consultations or custom branded skins in the metaverse.”
Consumers driven by sustainability and values
When it comes to purchasing decisions, most respondents, for the second consecutive quarter, place the planet first (26%), ahead of affordability (24%) and experience (20%), which is particularly evident in China and Brazilwhere 32% of respondents in each country prioritize the planet in their spending decisions.
Consumers are choosing to shop more sustainably, doing what they can to help the environment, with 56% saying they will pay more attention to the environmental impact of their purchases and 52% pledging to pay more attention to social impact. Two-fifths (42%) say they will only buy brands that align with their own values – a view shared by the same percentage of the Gen Z population and 48% of Millennials.
Rogers concludes, “People have used the past two years to fundamentally rethink their lifestyles and assess their relationship to consumerism and the values that drive their purchases. With less money to spend and growing economic and geopolitical worries, further fueling their worries about the planet and the social impact of their purchasing choices, customers are demanding not only to be valued themselves, but also to know whether the brands selling to them demonstrate values that match theirs. »
The latest edition of the EY Future Consumer Index is available at: ey.com/futureconsumerindex9
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About the EY Future Consumer Index
The EY Future Consumer Index tracks changing consumer sentiment and behaviors across time horizons and global markets, identifying new consumer segments that are emerging. The index provides regular longitudinal indicators and a unique perspective on which changes are temporary reactions to the COVID-19 pandemic, which point to more fundamental changes, and what the consumer might look like after COVID-19. The ninth edition of the EY Future Consumer Index surveyed 18,000 consumers across the United States, CanadaGreat Britain, France, Germany, Australia, New Zealand, Japan, China, India, Brazil, Saudi Arabia, Denmark, Sweden, Finland, Norway, Indonesia, Italy, Spain, Mexico, South Africa, Chile (New), Argentina (new) and Thailand (new) between January 28 and February 15, 2022.