- Consumers are spending less on goods they consider unnecessary
- Consumers plan to shop in-store more this holiday season
Some of the behaviors adopted by consumers during the COVID-19 pandemic, tracked by the EY Future Consumer Index since April 2020, have become embedded within mindsets: a majority (63%) of the 16,000 consumers surveyed say the new behaviors they have had to adopt now feel “normal.” Climate change and pursuing fulfilling experiences have become more important. The “planet first” and “experience first” consumer segments (rather than the society, health and affordability first segments identified in the Index) grew during the COVID-19 pandemic, rising from 16% to 26% and from 11% to 18% respectively, according to the eighth edition of the EY Future Consumer Index. Sustainability is important when making purchase decisions for 85% of respondents.
Choosing to live with less
The EY Future Consumer Index finds that respondents are reprioritizing their purchase decisions and are spending less on what they perceive to be unnecessary goods for financial (49%) and environmental (30%) reasons. This is likely to have a longer-term impact on attitudes to conspicuous consumption. In fact, brands are less of a factor for 44% of global consumers (49% for millennials and 47% for Gen Z). It is even less of a factor for Chinese respondents, with 59% of them saying brands are less important in purchase decisions. When it comes to the latest gadget and technology trends, close to half of global (41%) respondents feel less pressure to keep up. Only 27% of all respondents say that they now buy more things because it makes them feel happy, while 48% disagree with that statement.
Nearly half of global respondents (47%) also now say they feel more comfortable in their own skin, without the need for beauty products.
Overall, the pandemic has helped consumers realize they can live with less and consume “better”: they feel they have more clothes than they really need (48%) and are more likely to repair things instead of replacing them (53%).
Consumers are returning to stores this season
The Index suggests younger consumers will drive sales participation this season: 71% of Gen Z and 68% of millennials, compared to 37% of baby boomers, are planning to participate in the next big shopping event. However, how they shop has changed year-on-year.
While increased e-commerce penetration has been a major theme since the onset of the COVID-19 pandemic, over half (51%) of global respondents are planning to look for deals in-store, up from 39% last year. The Index indicates that two factors could explain this trend: not only have restrictions eased and stores reopened in most parts of the world, but consumers are also choosing to shop in-store more to avoid increased shipping costs and delays caused by supply chain disruption. Indeed, for the consumers who will shop online this season the top frustration is expensive shipping (32%), followed by product availability (25%).
The Index highlights that to mitigate this, companies will therefore have to rethink supply chain, inventory and logistics, especially as the quality of service they offer is growing in importance for at least 57% of consumers. Given that consumers are much more discerning in how they spend their money, it will be imperative for brands to remove these points of friction and facilitate fluidity between the virtual and physical worlds.
Commenting on the index findings, Sakis Moyseos, Associate Partner, Consulting Services and Head of Business Consulting and Government Sector at EY Cyprus, said: “During the pandemic, people have learned to live with less, a trend that is persisting and is unlikely to be reversed soon. We need to understand why, and it is becoming increasingly clear that saving is not the only reason. Consumers are adopting new values, relying less on brands, focusing more on environmental concerns and pursuing experiences rather than just things. Companies need to adapt fast to this new reality, analyze these new shopping behaviors and rethink the way they engage with a market where almost half of consumers place the planet or experience first.”
The latest edition of the EY Future Consumer Index is available at ey.com/futureconsumerindex8.