8 minute read 14 Jul 2022

The pandemic has permanently changed consumer behaviour — how brands and retailers react will be key to surviving the next UK crisis.

EY woman shopping online on her phone

Future Consumer Index: How to embrace the rise of the K-shaped consumer

Silvia Rindone

EY UK&I Strategy and Transactions Managing Partner

Strategic mind with a pragmatic spin. Intellectually curious. Mother of two. Passion for art, food and travel.

Ray MacSweeney

EY-Parthenon Partner, Consumer, Ernst & Young LLP

Strategist with 20 years of experience, focused on the consumer products and retail sector. Passionate about sustainability and providing pragmatic strategies that help deliver results.

8 minute read 14 Jul 2022

The pandemic has permanently changed consumer behaviour — how brands and retailers react will be key to surviving and thriving in the next UK crisis.

In brief
  • Consumers across all income groups are reducing discretionary spend, after price rises across the board. 
  • The difference between low- and high-income consumers is stark, with very different wants and needs. 
  • Although affordability is key, sustainability and new more economic and sustainable consumer behaviours, are here to stay. 

In the 10th edition of the UK Future Consumer Index, we are seeing consumers reacting to inflationary pressure and reducing discretionary spend as a potential recession looms. Although sensitivity to price increases seen across all categories is high, consumers are reacting differently to past crises. Coming out of the pandemic, consumers have learned new ways of behaving and living; sustainability remains important and digital engagement continues to advance. Brand and retailer reactions to the challenges and opportunities these consumer trends present will be key.

Unlike the pandemic and previous financial crises, the current and future challenges consumers face won’t (or shouldn’t) come as a sudden shock to either consumers or retailers. The pressure points, such as the upcoming energy cap changes have been well publicised, giving both retailers and consumers time to prepare.

Whilst time to prepare doesn’t mean an ability to cope, the consumer has changed thanks to lessons learnt during the financial pressures caused by the pandemic. Consumers have engaged in new skills such as batch cooking and make and repair rather than indulging in takeaways and consumerism in general. Such skills have endured and will prove helpful for the future.

The impact of price sensitivity on discretionary spend

In the most critical spending areas – such as gas and fuel, household energy, fresh food and food staples - 80 to 90% of UK consumers have observed price increases. Yet around 60% have made no change in how much they spend, most likely because they are unable to do so.

Others are managing to reduce spending. In fuel and energy around a third are purchasing less, while in the fresh food and food staples categories, around two in five are purchasing less or buying cheaper alternatives. 

When it comes to discretionary purchases, however, although fewer consumers have observed price rises, consumer reaction has been more decisive. For instance, in clothing, shoes and accessories two-thirds (60%) of consumers have observed price rises but nearly half (49%) of consumers are buying less and 7% have stopped purchasing altogether. In consumer electronics, 61% have noticed price increases, but 41% are purchasing less and 14% are stopping purchasing altogether, the latter figure the highest across all consumer categories.

Introducing the K-shaped consumer

Understanding consumer wants, needs and behaviours is vital. EY teams research reveals that rather than consumer behaviour averaging towards the middle, we are seeing consumers drifting towards two extremes. At one end are cash-strapped consumers who are watching every penny. At the other are those who are willing to spend - in certain circumstances - and want retailers and brands to excite and entice them to do so. Navigating this K-shaped profile in consumer behaviour is key to surviving and thriving in the coming crisis.

Understanding the K-shaped consumer’s wants and needs

When we look again at consumer wants and needs by income level, there is a very different picture. It’s here that the K-shaped consumer becomes clear. Only 11% of high-income consumers, adopt an affordability first mindset. By contrast 4 in 10 (42%) low-income consumers are affordability first driven. Consumers in the middle are shifting towards these two extremes.

Pessimism is rife for low-income consumers, with nearly half (46%) saying that they feel worse compared with February. Forty-four percent expect their financial situation to be worse in 12 months and a quarter (26%) feel that their mental wellbeing will decline in the next six months. Only 39% feel in control of their lives, half of the 79% of high-income consumers who feel the same.

The number of middle-income consumers who expect their mental wellbeing to worsen (13%) is about three times higher than the number of high-income consumers (5%). A third (33%) expect their financial situation to be worse in 12 months, more than twice high-income consumers. 

Lower- and middle-income consumers are attempting to regain control

In our last index, we saw the consumer determined to regain control of their lives. In this edition we see consumers adapting behaviour in the face of financial concerns to keep control.

Lower- and middle-income consumers are increasingly focusing on affordability and price in their purchasing decision-making and are making radical decisions to cut costs. Discretionary spending has been hit hard: 37% are purchasing only the essentials, a significant increase from February’s 26%.

Brand switching also continues, with a third (32%) of UK low and middle income consumers now trying new brands to reduce costs, an increase from just over a quarter (26%) in February. Spending on experiences, such as eating out, has also fallen to 37%.

Higher-income consumers are looking for reasons to spend

Yet whilst low- and middle-income consumers struggle to gain control of their finances, there is a group of higher-income consumers who are more willing to spend than ever and want a reason to do so.

61% in this income bracket say they are excited about spending money on things that will improve their lifestyle. The number buying more things because it makes them happy has risen from 50% in February to 54% in June, while those spending more on experiences has also risen, up to 62%, nearly twice that of their lower-income counterparts. 

A rise in affordability but a maintained demand for sustainability too

Naturally, we have seen affordability rise up the consumer agenda in the past few months as a result of the new challenges consumers face. The affordability first mindset has risen from 25% in February to 27% in June.

But what’s interesting is that sustainability, or planet first, continues to be key. It was 1% higher than affordability in February, and while it has fallen slightly to 24% in June, that’s up from 14% in November 2020 – proof that consumer sentiment around sustainability is a long-term and enduring trend. 

Sustainability is at the heart of how consumers are making more economical choices

Across all income groups, consumers see less reason to consume for consumption’s sake. 70% of consumers prefer to repair rather than replace items while 75% say they are less interested in the latest fashion trends. Over two-thirds (64%) don’t feel the need to keep up with the latest gadget and technology trends.

More economical, sustainable choices are changing consumer behaviour. 90% of consumers say they are making an effort not to waste food and 55% are paying more attention to the environmental impact of what they purchase. More than a third (37%) of respondents say they are buying more second-hand products.

The perception of sustainable goods has also improved, with the impact of barriers to purchase reducing in every instance that we surveyed consumer opinion on. For example, in the last year, perceptions of low quality have fallen from 64% to 53%, whilst the idea that sustainable products aren’t durable has fallen from 56% to 43%.

EY Future Consumer Index


of consumers now prefer to repair rather than replace items.

Ultimately, consumers are looking for a balance between “product value” and their “personal values.” Brands and retailers need to find ways to deliver sustainability at an affordable price to win the K-shaped consumer.

A new wave of digital change

In parallel, consumers are shaping the next wave of the digital revolution. Blockchain, cryptocurrency and metaverse technologies are accelerating. And this revolution is being led by younger consumers.

One in 10 younger consumers (aged 18-40 years) have now used digital currencies to make transactions, compared with 3% of over 40 year-olds. Meanwhile experiences are also becoming more virtual - 15% of younger consumers have explored the metaverse, compared with 2% of older consumers (over 40 year-olds).

This revolution is in its early stages but is rapidly changing consumer expectations of digital experience from brands and retailers. In addition to managing the challenges of today, brands and retailers need to continue to invest and innovate in digital for tomorrow.

What UK brands and retailers need to do to embrace the new needs of the consumer

To prepare for this new wave of consumer behaviour, brands and retailers need to take decisive action. It’s clear another crisis is coming, but consumers are at least more prepared than they have been in the past.  

Brands and retailers must consider how they engage and inspire an increasingly price sensitive consumer, whilst meeting and exceeding their growing sustainability and digital experience expectations.

We suggest UK brands and retailers focus on four key areas:

1. Manage the perception of value alongside an exciting offering

The need for businesses to be seen as offering good value continues, but it must both persuade the reluctant, lower-income consumer that value is on offer as well as engage the more affluent consumer with exciting new offers.

2. Manage price increases from increased costs

In our last index, an effective price architecture and tiering of ranges was key. As retailers – as well as their customers – seek to absorb rising costs, the importance of carefully managing the subsequent price increases will be essential.

3. Meet the consumer need for sustainable, economical consumption

We have seen that the changing behaviours, such as the trend to buying more second-hand or the money-saving cooking skills learnt during the pandemic, are here to stay. Retailers need to reflect this and many already are doing so, with their own second-hand and rental platforms, for example.

4. Accelerate digital investment for future digital engagement

Although many brands might feel their digital revolution took place during the pandemic, more change is coming. An acceleration of digital investment is required to meet the next wave of change in how consumers are digitally engaging, especially for younger generations. 

  • Methodology

    The EY Future Consumer Index tracks changing consumer sentiment and behaviours 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 10th edition of the EY Future Consumer Index surveyed 18,000 consumers across the US, Canada, Mexico, Brazil, Argentina, Chile, the UK, Germany, France, Italy, Spain, Denmark, Finland, Sweden, Norway, Australia, New Zealand, Japan, China, India, Indonesia, Thailand, Saudi Arabia and South Africa between 18 May to 7 June 2022.


Retailer and brand success will depend on how they deal with price sensitivity, new consumer behaviours and the increased demand for sustainability and digital engagement. Catering to needs and wants of consumers across a wide spectrum of income levels will also be key.

About this article

Silvia Rindone

EY UK&I Strategy and Transactions Managing Partner

Strategic mind with a pragmatic spin. Intellectually curious. Mother of two. Passion for art, food and travel.

Ray MacSweeney

EY-Parthenon Partner, Consumer, Ernst & Young LLP

Strategist with 20 years of experience, focused on the consumer products and retail sector. Passionate about sustainability and providing pragmatic strategies that help deliver results.