- 52% of respondents spending less on non-essential consumer goods
- Health concerns for respondents relating to pandemic receding globally
- 53% of respondents eager to catch up on experiences they missed out on due to the pandemic
Dublin, 16 November 2022: Many consumer respondents globally are preparing for a more financially cautious and environmentally friendly holiday season as health concerns from the COVID-19 pandemic begin to fade while cost of living and environmental concerns deepen, according to the latest EY Future Consumer Index (FCI).
Consumers are optimistic despite economic challenge
The 11th edition of the global survey of more than 21,000 consumers conducted between 23 September and 14 October 2022, finds that respondents shopping with an ‘Affordability first’ and ‘Planet first’ mindset are jointly the largest spending cohorts, both representing 25% of all respondents. The study finds many respondents are approaching the holiday season and beyond with a desire to live sustainable or healthy lives, or to have rewarding experiences. Overall, consumers are optimistic about the future, and 74% are looking forward to getting “back to normal,” after so much disruption caused by the COVID-19 pandemic. While 58% of respondents feel very concerned about the rising cost of living, 59% feel in control of their lives and are eager to catch up on experiences they missed out on due to the pandemic (53%).
With environmental concerns rising, consumers are looking for ways to reduce consumption. Thirty-seven percent will purchase less food for celebratory meals to avoid waste this holiday season, and 44% plan to use less festive lighting and decorations at home. Sixty seven percent of respondents say they are happy to repair their belongings rather than buy new, with 45% saying they care more about the usefulness of the products they buy..
Concerns over inflation and the economy are still present for consumers. 92% of respondents are extremely or moderately concerned by their country’s economy and 87% are concerned by their finances. 89% of respondents state they plan to spend less, or not increase their spending on their families this holiday season and 41% will spend less on gifts for friends.
Expected changes to household spending will most noticeably be reduced on take out and food delivery with 42% of respondents planning to spend less in the next three to four months.
Experience led consumers spend more
“Experience first” respondents (63%) are eager to catch up on missed experiences from the pandemic and one in three will spend more on vacations and activities outside the home (35% and 31%, respectively). But despite a less frugal mindset and a willingness to spend more freely, 41% of “Experience first” respondents are concerned about their household debt. Their overall optimism overrules their concerns, with 50% of this tribe willing to buy non-essentials, services and experiences to bolster happiness.
Colette Devey, EY Ireland Partner and Consumer Products and Retail Lead, says:
“In line with report findings, we have seen Irish consumers grow more cautious over the course of 2022. While fears of a resurging pandemic finally seemed to have lessened, a combination of inflation and increasing energy and household prices are challenging consumer sentiment.
“However we believe there is still a cohort of Irish consumers who are eager to ‘make up for lost time’ and who are willing to spend, albeit with discernment, on shared experiences with loved ones over the festive season in a way that wasn’t possible at the height of the Covid-19 Pandemic.”
Against the backdrop of cost-of-living challenges, “Affordability first” respondents – those that are cost led– are concerned about the rise of living costs (62%). With 59% of this group only shopping for essentials, their seasonal spending won’t be on the latest trending gifts but instead on gifts they feel are useful. Sixty percent of these respondents are spending less on fashion and cosmetics compared with 49% across other respondent consumer groups (“Planet first,” “Experience first,” “Health first” and “Society first”). Many cost-concerned consumers are planning to celebrate at home this year with 50% aiming to spend less this holiday season, reducing going out and cutting spend on food and drink. Japanese respondents are most concerned with affordability (41%) with the lowest groups in India (4%) in China (6%) and Nigeria (11%).
“Planet first” consumers have fewer financial worries. These respondents are less likely to be cutting their spending — unless it’s in an effort to live more sustainability, with 41% intending to buy fewer physical goods for environmental reasons. Forty percent will make sustainable food choices for their celebratory meals this holiday season, compared with just 28% of other respondents. Thirty-seven percent of “Planet first” respondents will look to buy locally made gifts and 40% will purchase less food in a bid to reduce food waste.
The FCI also finds that respondents prioritising societal issues also care for the environment; 70% are deeply concerned about the fragility of the planet and see the festive season as an important opportunity for them to positively express their social values, in what they buy and how they bring people together.
Colette Devey adds, ““Cost is not the only matter which is front of mind for Irish consumers this festive season. With COP27 currently underway, “Planet first” consumers are also focused on being more sustainable and reducing unnecessary consumption. Search the web for festive trends in 2022 and the drive to be eco-friendly is evident, be that alternatives to the traditional Christmas tree, options for sustainable decorations or crafting ideas which encourage up-cycling and recycling.
“Irish consumers are also making different decisions about the products that they will purchase. In addition to possibly spending less overall on gifts this year, consumers may shy away from the latest trends to focus on gifts that they believe are useful and which are locally sourced.
“Around the country’s dinner tables, the trend is similar –reduce the potential for unnecessary waste and shift to locally-sourced and alternative food items e.g., plant-based. The same is true for clothing, where again the desire to keep up to date is increasingly being overridden by sustainability intent.”
Digital shopping divides consumers
Consumers now have a plethora of channels and destinations for their shopping but not all shop in the same way. As digital continues to grow in prominence, issues of trust, cost and the continued preference for physical channels remain. Thirty-six percent of respondents concerned with the affordability of products will prefer to shop in-store for the holiday period, while 52% have never bought groceries online and nearly half (48%) are not willing to share personal data for personalised recommendations for cheaper alternatives. In contrast, “Experience first” respondents have widened their quest for experiences, with more than a third (36%) purchasing virtual products such as digital skins or interacting with virtual multi-user platforms. Meanwhile, 43% have bought an item directly from social media.
“Society first” respondents reflect their spirit of connection and activism in their digital behavior. They are not more likely than other consumers to use digital technologies, but they are more likely to use them to interact with other people, with 55% reporting that they recently socialised with friends and family on video platforms. “Society first” respondents are the smallest group in all regions and most countries, with their highest shares in China (18%), Nigeria (18%) and Vietnam (17%).
Colette Devey says, “For brands and retailers the message is clear. Irish consumers will be making careful decisions on how and where they spend in the coming weeks and months. Meeting the needs of the conscious Irish consumer on both affordability and sustainability, whilst also enabling ease and confidence in digital shopping will be key to success. Consumer companies must focus on pricing and range in order to meet the many and varied needs of their Irish consumers.”
The latest edition of the EY Future Consumer Index is available at: ey.com/FutureConsumerIndex11
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About the EY Future Consumer Index
The EY Future Consumer Index tracks changing consumer sentiment and behaviors across time horizons and global markets, identifying the new consumer segments that are emerging. The Index provides regular longitudinal indicators and a unique perspective on which changes are temporary reactions to the COVID-19 pandemic, those which point to more fundamental shifts and what the consumer post-COVID-19 might be like. The 11th edition of the EY Future Consumer Index surveyed 21,000 respondents across the US, Canada, Mexico, Brazil, Argentina, Chile, UK, Germany, France, Italy, Spain, Denmark, Finland, Sweden, Norway, Australia, New Zealand, Japan, China, India, Indonesia, Thailand, Saudi Arabia, South Africa, Vietnam, Nigeria and the Netherlands.