The 9th edition of EY Future Consumer Index: Indonesia’s insights

On the bright side for the planet, sustainability and value increasingly guided consumers buying decisions.

The glimmer of hope for a move to a more positive post-pandemic world for consumers has been hit with growing economic uncertainties in the past few months, diminishing consumer confidence once again, according to the latest EY Future Consumer Index.

The ninth edition of the quarterly global survey of 18,000 consumers, conducted in February 2022, finds that the rising cost of goods and services is impacting 52% of global respondents’ ability to purchase goods and is affecting their purchasing decisions.

While, inevitably, this impacts lower-income earners the most (62%), the survey shows that middle-income earners (48%) and high-income earners (42%) are also being squeezed. This is evident across several developing countries in Asia, in which more than 50% of middle-income earners and more than 60% of high-income earners in Indonesia, India and Thailand, respectively, are affected. This further emphasizes that emerging markets are feeling the pinch strongly, with 62% citing affordability affecting their choices (South Africa 77%, India and Indonesia both at 64%, Brazil 63%, China 42%) compared with 45% of respondents from developed markets (US 50%, Canada 52%, UK 42%, France 40%). 

Driven largely by the inflationary impact on prices and the anticipation of new COVID-19 variants, the survey shows that consumers will continue to rein in their consumption, trade down to cheaper alternatives, and purchase fewer non-essentials. Some key items where respondents are spending less include clothing (38%), beauty and cosmetics (35%) and alcohol (30%). Many are already seeking cheaper alternatives for fresh food (20%) and packaged food (19%). This trend is reflected among consumers in Indonesia, where purchasing habits remain unchanged only for essentials, being gas/fuel (56%) and fresh food (48%).

Uncertainty around managing rising living costs is driving almost two-thirds (60%) of all respondents to want to save more for the future, with 39% of all respondents having made it a goal already to save rather than spend. The biggest savers are in South Africa (56% of all country respondents), Indonesia (54%) and Mexico, Brazil and Argentina (all at 51%). Consumers in Asian countries where large portion of the population earn income on a daily or weekly basis are becoming more cautious spenders, preferring to save more for the future instead, such as Indonesia (84%), India (81%), Thailand (75%) and China (68%).

Experiences rather than ‘things’ are driving spend

The survey shows that consumers are looking for experiences more than ever before, as they make up for lost time and look for escapism from the pressures of the post-COVID-19 world, with 45% saying they plan to live more in the moment.

Out of the five key broad spending priorities – planet first, affordability first, experience first, health first and society first – experience has seen the biggest increase, doubling in priority since 2020 and is now third biggest priority when consumers decide on where to spend, while it was the smallest at the beginning the pandemic.

Experience is now the biggest priority segment in the US (24%), France (26%), India (31%), and Thailand (32%). It remains the smallest segment in Finland (13%), Australia (15%) and New Zealand (10%). Forty-two per cent of all respondents are planning on spending more money on experiences in the next year. However, 39% are less inclined to be involved in experiences outside of their home, so the experience must come to them. Only 36% of respondents from Indonesia would be willing to spend more money on experiences, in which 45% prefer to have the experience come to them.

Customers who are venturing out are demanding more from physical stores, with more than a third (36%) planning to only visit stores that offer a great experience. This is consistent in Asian countries that display high collectivism, such as India (69%), China (59%), Indonesia (55%) and Thailand (53%).