As we approach the annual Black Friday consumer spending splurge, EY’s global research sheds some light on consumer behaviours at this time. Cost and convenience are the top priorities for consumers as they contend with higher prices and squeezed finances. The latest EY Future Consumer Index survey was conducted in September and October among 22,000 consumers in 28 countries and found a broad willingness to buy more sustainable products, but only if the price is right and the brand is trusted, a pronounced preference for online shopping, and highlighting a decline in trust for AI.
This presents an interesting set of challenges for online retailers. Consumers are turning to online channels in search of bargains but are wary of AI technology being used to support and drive the overall experience. AI has clear and obvious benefits when it comes to improving the customer experience, but retailers must be careful to deploy it in ways that its customers are comfortable with.
Managing pressures: consumer sales and inflation
Recent disruptions have impacted sentiment and accelerated shifts in consumer behaviour, changing how people shop, what they buy and how they consume everything from products and media to social experiences. The EY Future Consumer Index tracks those changes across key markets around the world. Unsurprisingly, the survey found that cost-of-living pressures are driving consumers to change their spending patterns as they make efforts to optimise their budgets accordingly. 85% say finances are a concern; 65% are concerned about their country’s economy; 59% are worried about the affordability of household necessities; 51% are cutting back on non-essential items; and 28% are trying new brands in an effort to reduce costs.
Overall, consumers are being more frugal with their spending. 70% say they will be more focused on value for money in the future and the same number will be more cautious about their spending.
That frugality is translating into a greater focus on blockbuster seasonal sales events like Black Friday. In October 2023, 61% of consumers said they were planning to take part in the next one – Black Friday in most cases. This was an increase of six percentage points on the October 2021 result. Even more tellingly, 71% are holding off on making some purchases until the next big sales event, up from just 48% in 2021.
Empowering the consumer through AI
EY’s survey also found that there has been a marked shift in where they will make those purchases in the past year. Half of all consumers (50%) intend making purchases or looking for deals online at the next big sales event, up from just over a third (34%) in October 2022. Just 10% say they will do so in-store, down from 24% a year ago. The numbers intending to spread their bargain hunting equally in-store and online is broadly the same at 40%, down slightly from 42% in 2022.
This reflects a significant increase in the use of digital technology in daily life. For example, 47% of consumers said they had ordered groceries online for delivery or pickup, up from 34% in June 2022. Similarly, 60% had gone online to find food inspiration and recipes, up from 43% in 2022.
In response, retailers are developing integrated engagement tools across platforms and using generative AI to deliver on consumer expectations. However, they need to address consumer concerns around digital trust.
While 70% of consumers say they have some or a good understanding of AI and what is it used for, their trust in AI-generated content and capabilities is declining. In the latest survey, 59% said they trust AI generated product visualisation, down from 67% in just six months since the April 2023 survey. The result was similar for AI powered personally customised recommendations, down to 58% from 66%. AI generated responses to questions fared similarly with 56% expressing trust as opposed to 62% in April.
Negative media coverage in relation to AI and its potential uses may be a factor in this loss of trust, but retailers need to take steps to address it.
Used appropriately, AI has the power to revolutionise Black Friday sales by guiding consumers to the value for money purchases they are looking for. However, care must be taken to ensure that the consumer feels not only at the centre of the process but in control of it.
Where products or services are recommended, alternatives must also be displayed to offer real choice. AI should make price and product quality comparison easier and more transparent, not the opposite. And crucially, when consumers engage with AI powered customer service chatbots the experience must not in any way be inferior to the human experience and there should be clear pathways to human interaction if desired or required. Creating a frictionless experience for consumers is key to retaining their trust in technology.
AI's role in smart consumer decision-making
Finally, AI can be used to help consumers find more sustainable alternatives when making product purchases. 67% of consumers say they are deeply concerned about the fragility of the planet and 61% intend paying more attention to the sustainable impact of their consumption in future. However, 70% say high prices deter them from buying sustainable products and 59% say they only take environmental action when it saves them money.
Retail and consumer product companies can utilise AI to help consumers find sustainable products that suit their pockets. Again, however, this must be done in a transparent way that the consumer can trust.
AI can also help consumers in their efforts to create less waste by buying the right product first time. Clothing retailers have leveraged AI to create virtual changing rooms for their products and home furnishing retailers are using AI to enable consumers to virtually place products into their home setting before purchasing.