Many consumers are adjusting to the rising cost of goods and services globally. They do so by changing consumption habits and focusing on more conscious purchasing choices.
According to the latest quarterly survey conducted by Ernst & Young, one of the Big Four global accounting firms, 52 percent of 18,000 respondents exhibited diminishing consumer confidence and are being affected by growing economic uncertainty.
Power isn’t just shifting from employers to employees and older to younger generations. There’s also a change in the power dynamic between brands and consumers.
As a result, 60 percent of consumers plan to reduce their expenses, while 39 percent have already begun to save money by cutting back their purchases.
The higher prices impact all social classes, with 62 percent of low-income earners reporting that it significantly affects their purchasing choices. Meanwhile, 48 percent of middle-income and 42 percent of high-income earners said their purchasing choices are affected.See Also:Europe’s New Sustainable Ag. Policies Will Make Food More Expensive, Farmers Warn
The survey suggests 30 percent of consumers are now spending less on alcohol, with 20 percent looking to cheaper alternatives for fresh food and 18 percent for packaged food.
Despite consumers seeking cheaper alternatives, data from the International Olive Council show that olive oil consumption has grown steadily over the past five years. Retailers in the United States, the third-largest olive oil consumer, remain poised for this trend to continue.
In many countries, consumer choices are motivated by values such as “planet first,” which 26 percent prioritize over affordability (24 percent). According to Ernst & Young, 32 percent of respondents in China and Brazil put the planet first when choosing a purchase.
“Health first” is prioritized by 19 percent of respondents. Sustainability is also taking a significant share of consumer attention.
“Consumers are choosing to make more sustainable purchases, doing what they can to preserve their environment, with 56 percent saying they will pay more attention to the environmental impact of their purchases and 52 percent committing to pay more attention to the social impact,” the report said.
One of the most relevant trends the report shows is consumers’ growing interest in experiences, as their interest shifts from “having” to “doing,” with producers and resellers challenged to find new approaches.
Forty-five percent of respondents said they plan “to live more in the moment.” According to the survey, participants are transitioning to the next normal after two years of restrictions to curb the Covid-19 pandemic and are more eager to take part in new experiences.
“Power isn’t just shifting from employers to employees and older to younger generations,” said Kristina Rogers, Ernst & Young’s global consumer leader. “There’s also a change in the power dynamic between brands and consumers.”
“As people spend more time at home and offline, they are becoming harder to reach than ever,” she added. “Brands will need to work much harder to be in the right place at the right time with the right message. Consumers are more discerning than ever, which makes it more difficult to capture and hold their attention, and they are changing the way they engage with brands.”
While 39 percent of consumers are less eager than in the past to be involved in activities outside of their home, 36 percent are interested in visiting stores only when offered relevant experiences.
The report suggests the creation of new opportunities to those that reach their clients in novel ways; still, “the types of experiences that will appeal most to consumers are easy to access and require a minimal time investment,” Rogers said.
“Despite an economic uplift 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 a growing unease around current global geopolitical issues,” she concluded.