Economic uncertainty and rising prices are discouraging consumers worldwide, according to the latest edition of EY's regular Future Consumer Index survey.
The ninth edition of the quarterly global survey of 18,000 consumers finds that the rising cost of goods and services is affecting the purchasing capabilities and decisions of 52% of respondents around the world.
While, inevitably, rising prices are affecting low-income earners (62%) the most, the survey shows that middle (48%) and high income earners (42%) are also being squeezed.
Developing economies are feeling the pressure strongly, with 62% of consumers from these economies reporting that price affordability is affecting their choices, compared to 45% of respondents from developed markets.
In light of significant inflationary pressures on prices and concerns about new variants of COVID-19, the survey suggests that consumers will continue to cut back on consumer spending, turn to cheaper alternatives and limit purchases of non-essential goods.
Editors of Techodom - a consumer technology recommendation website - they stated in an interview that the visits to articles that recommend products that worth $1000 dropped significantly. On the other hand though, articles that promote products worth $100 or less, saw their traffic stats increase. This observation, further enhances the hypothesis that consumers are changing their spending habits.
Some key products on which respondents are spending less include clothing (38%), toiletries and cosmetics (35%), and alcohol (30%).
At the same time, many are already looking for cheaper alternatives for fresh (20%) and packaged food (19%).
According to the survey, uncertainty about managing the rising cost of living is driving nearly two-thirds (60%) of respondents to want to save more in the future, with 39% already setting a goal of saving rather than spending.
The survey shows that consumers are seeking experiences more than ever before as they make up for lost time and look for ways to escape the pressures of the post-pandemic world, with 45% saying they intend to live more intensely in the moment.
Of the five key categorizations of consumer priorities - 'planet first' (Planet first), 'affordability first' (Affordability first), 'experience first' (Experience first), 'health first' (Health first) and 'society first' (Society first) - experiences have seen the biggest increase, at double the rate of 2020, and are, today, the third highest consumer spending priority, up from the last place they were at the start of the pandemic.
42% of all respondents plan to spend more money on experiences in the coming year. However, 39% say they are less inclined to seek experiences outside of their home.
Consumers who will seek experiences outside the home demand more from physical stores, with over a third (36%) planning to only visit stores that offer an exceptional consumer experience.
When it comes to consumer decisions, for the second consecutive quarter, most respondents put planet (26%) ahead of affordability (24%) and experience (20%).
Consumers are choosing to make more sustainable purchases by doing what they can to protect 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 their social impact.
Two in five (42%) say they will only buy from brands that align with their values, a view shared by Generation Z at the same rate and even higher (48%) by Millennials.
Commenting on the findings of the new edition of the survey, Thanos Mavros, Partner in EY Greece's Advisory Services Department and Head of EY's Consumer Products and Retail Sector in South East Europe, said:
"Continued rising prices and uncertainty about the course of the pandemic and geopolitical developments continue to influence consumer choices. Consumers, seeing their purchasing power diminish, are cutting back on purchases of non-essential goods. At the same time, however, the number of consumers who put experience before the goods or services they buy is increasing, while sustainability remains the dominant purchasing criterion. In this fluid environment, businesses globally will need to adapt their strategy to different consumer expectations and monitor the market closely to identify - or even predict - the trends that will dominate in the coming period."
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COVID-19 is a human tragedy that has affected millions of people.
It is also having a permanent and transformative impact on consumer purchasing behavior, which in turn will impact the future of the global economy.
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