5 minute read 8 Jul 2020
Woman taking a picture to shop window at night

Insular or introspective: How attitudes will change consumer retail buying habits

By

EY Oceania

Multidisciplinary professional services organization

5 minute read 8 Jul 2020

This is the era of the introspective consumer, a consumer who is far more pensive, looking at the world differently and reassessing what matters most. 

Over the past four months, there has been a fundamental shift unfolding in how people decide to spend their time, and money. To some extent, this shift is driven by financial necessity and the associated angst that comes from the current economic downturn. It is also driven now, more than ever before, by a shift in how people prioritise their values.

EY’s Future Consumer Index tracks changes in attitudes, outlook, values and behaviour across 18 countries each month.

In our most recent research in June, only 11 per cent of respondents said they were feeling worse than last month, with most saying they were about the same. We expect this could change , depending on how New Zealander’s respond to the news that Australia is experiencing a significant second wave in Victoria that has caused border shutdowns. 

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The loss of control in their lives has made people more inward focused and self-protective as they worry about what the future holds. We are seeing a pronounced shift in values due to deep reflection about ‘what matters most’ for people.  

While the shift in values is not necessarily surprising when we consider the likely impact of major health and economic crises, it will have a lasting impact on the behaviour of consumers and should change the way retailers and consumer facing organisations think about the way they plan to interact with their target markets. 

Insular focus

62%

Number of people intending to support domestic brands produced in their own country

“While the economy in Australia wasn’t at full horsepower in 2019 with a number of key metrics below where they needed to be, life was still quite good,” EY Sweeney partner Marc L’Huillier says.

“Most New Zealanders had a comparatively stable foundation and largely felt in control of the direction of life. They had more certainty than not and could look to the future with a degree of confidence. With the pandemic came an immediate loss of control and anxiety about what it all meant. People felt disorientated. Large numbers lost their job or had their hours reduced, with many reliant on the different forms of government support. Of those remaining in employment, over one-third are worried about the security of their job. It has been an incredibly confronting and unsettling period.

The instinctive reaction is to turn inward and to become self-protective – to focus on me and my immediate world. Consumer behaviour changes
Marc L’Huillier
EY Oceania Consumer Advisory, Consumer Insight Lead, Partner

“The coming period of a sustained economic downturn also holds profound implications at a social and political level. The acute pressure it puts on people and the associated feeling of vulnerability has an impact. We will see much harder-line social perspectives and uncomfortable prejudices emerge.” he says. 

The relevance for organisations of this pressure on consumers and how it will play out in the future lies in the way their values are being re-defined. This latest data shows consumers pulling in quite different directions as they prioritise different things. We saw five value-based segments emerge in our study. For some it’s about the base level of affordability and financial survival; while for others its about prioritising areas like health and safety, the planet and environment, societal good, and putting personal experiences first. Any organisation looking to connect with consumers needs to understand this evolution and fragmentation.

As part of the shift and in accordance with the data showing a move to more self-protectionist and insular values, the Index shows nearly two-thirds of consumers now want to buy domestic brands produced in their own country. More specifically, 60 per cent of those surveyed said they would prefer to buy local and independent brands produced by businesses within their local community, compared to only 14 per cent for either local or domestic brands produced outside their home country. 

“The shift to a highly contemplative and pensive mindset was accentuated by the monotony, deprivation and social isolation of lockdown. The forced reclusion created time to think, to reflect and to worry. It’s seen the emergence of what can be called the introspective consumer,” L’Huillier says.

He suggests how well retailers and consumer facing brands weather this next period will be predicated on their commitment to being human centric by putting consumers values and behaviour at the heart of decision-making, the confidence to evolve business models to meet the expectations of customers with different outlooks, and the ability to deploy technology solutions at speed. A transformative mindset needs to prevail.

EY Partner and New Zealand Consumer Sector lead, Rich Macfarlane, says that while the New Zealand recovery has been better and faster than most in the world, some of the underlying issues for consumers have been exacerbated. “Lockdown has forced consumers online, but the actual experience of doing that for a lot of our big brands here has been challenging.

“So now we’re coming out the other side of the rebuild, the experience isn’t one that consumers necessarily want to engage in. They did when they didn’t have a choice because of lockdown but now we’re seeing them switch back to more traditional channels,” Macfarlane says.

Despite this, there has been some great ingenuity in the market that came out of the darkest days of lockdown. “Consumer facing challenges were released in a matter of days, and the conversation now happening with a lot of our clients is how to keep that pace of change and keep providing that high level of innovation.”

Even switches in business models, such as tourism operators relying on inbound tourists restructuring their operations to take advantage of the domestic market via shifts in pricing and product and service offerings, is an example of the responsiveness to changing consumer markets.

The question for businesses becomes, do I segment my offering and adapt my strategy, he says.

“What we’re seeing is the consumer saying, ‘I might downscale from a premium product to a home brand product but I might also like to make a choice about whether I spend that money on the product at all’, so a complete rethink about where and why they spend money,” Macfarlane says.

For organisations and businesses looking to survive the values shift, it’s helpful to see this new phase as the culmination of a period of enforced self-reflection. As American biographer Robert A. Caro wrote after years of interviewing people and writing about their lives: “there are certain moments in life when you suddenly understand something about yourself”.

People across New Zealand and Australia are reaching that point of self-understanding and that creates an incredibly challenging environment for organisations looking to accelerate out of the pandemic.

The most fundamental competitive advantage available today is to have a better understanding of the impact of the pandemic on people and the way it is re-shaping how they are looking at their life and the choices they will make. The organisations that will succeed will be the most prescient, with foresight built on unique insight into consumer behaviour.

Summary

EY’s Future Consumer Index  tracks changes in attitudes, outlook, values and behaviour across 18 countries and it is showing that consumers are now more likely to support local then ever before. 

About this article

By

EY Oceania

Multidisciplinary professional services organization