6 minute read 14 Jan 2022

UK consumer values and desires have changed significantly during the pandemic, but affordability gaps still drive purchasing decisions.

EY employee reading ingredients on a jar

Why the new normal is about shopping better, not shopping more

Authors
Silvia Rindone

EY-Parthenon UK&I Retail Lead, Ernst & Young LLP

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.

6 minute read 14 Jan 2022

UK consumer values and desires have changed significantly during the pandemic, but affordability gaps still drive purchasing decisions.

In brief

  • Values and ideals have changed as a result of the pandemic, driving new purchasing patterns based on social and environmental factors.
  • It means that consumers are shopping with a heightened sense of awareness of such issues, but affordability is still key.
  • Significant say/do gaps remain with intended behaviours not always translating into actual behaviours.

Successful vaccination programmes and accelerated booster rollouts have given greater hope for a return to normal life, the eighth EY Future Consumer Index (FCI) reveals, with 69% of UK consumers looking forward to a feeling of normality. But ‘normal’ has changed, with consumers now acting with a heightened sense of awareness, not only of possible risks such as new variants but also the wider societal and environmental implications of what and how they buy.

Our earlier FCI reports saw the emergence of a cautious consumer, driven by the need to be frugal with cash and careful with their health. Concerns around health of family (82%), jobs (52%), freedoms (81%) and finances (68%) are receding since our last survey, the outcome is a more considered consumer with a growing sense that their spending will be increasingly driven by factors such as sustainability, social impact and actual need rather than affordability.

The desire for a better version of normal

UK consumers have had time and inclination to stop and reconsider what, and how, they buy. They are moving away from unconsidered consumerism and towards mindful consumption.

For 67% of consumers, behaviours adopted during the pandemic are their new normal, with almost half (49%) saying that the way they live will remain significantly changed in the long term.

We have seen a pivot of consumer values. In May the most important consumer segment, for 33% of UK consumers, was affordability first, followed by health first (24%) and planet first (18%). But priorities have changed since, with planet and affordability now equally ranked at 26% each, and health falling to 17% as vaccinations proved their worth. 

Four characteristics of the “new normal”

A desire for more responsible buying as planet first values strengthen

This pivot of values signals a societal change and a decline in throwaway culture. UK consumers are expecting to buy better in the longer-term, with high quality remaining as the purchase criterion that consumers are most willing to pay a premium for in the future (46%).

Value for money (56%) and price (55%) remain important, and 52% say they are thinking more carefully about how they spend. But they are being more responsible in their buying too. Almost half (45%) say that they are more likely to repair things than replace them as the change in behaviour drives more mindful, lower-cost consumption habits such as reselling, renting and subscriptions. The behaviour of a company is as important as what it sells for 67% of respondents.

Unconsidered consumption is waning. Just under half (49%) say they will buy fewer physical items because they don’t need them. Instead, 51% say they will pay more attention to the environmental impact of their consumption and 45% to the social impact.

However, a say/do gap remains. For instance, while 46% say the environment is a top priority, 75% refuse to pay a premium for more sustainable goods and services. Similarly, 51% intend to pay more attention to the environmental impact of their consumption and yet 38% will travel further for groceries if there is better parking. 

Greater divisions between affordability priorities of high and low income

Affordability is still key, however. 68% are concerned about the impact of COVID-19 on their finances and 41% are spending less on non-essentials, with 56% focusing more on value for money in the future.

There is increasing income stratification in the priorities that consumers are highlighting. Higher-income consumers are significantly less “affordability first” focussed, down from 23% this time last year to 6% now. 32% of those high-income consumers who were “affordability first” are now “planet first”.

Lower-income consumers meanwhile, are more focussed on finances and are consistently adopting an affordability first mindset (irrespective of the pandemic); with 41% citing affordability first, the same as this time last year and only a small increase in planet first, up from 14% to 17%.

The digital and physical convergence is driving stronger channel integration 

The digital shift continues to accelerate, with 37% of consumers planning to shop more for products previously bought in-store. But physical and digital integration is also important, with nearly three-quarters (72%) mixing online and in-store purchasing for major shopping events and 26% ordering online and picking up in-store more often.

But frustrations have changed since our earlier reports. Availability of delivery has become more important (40%), compounded this year by out-of-stocks (39%) due to supply chain challenges. Customer experience will need prioritising to maintain customer loyalty since this bugbear is a common reason for consumers to swap brands.

A greater focus on work/life balance

The reappraisal of values, as well as for some a remaining nervousness about wanting to go out – with 49% much less likely to go out unless they must – means that life continues to be rebuilt around the home.

Half of respondents (51%) say they have become more used to cooking at home, driving 22% to say they will spend more on fresh food. The same amount plan to spend more on home improvement products and services and 23% plan to spend more on grocery delivery services.

The ability to work from home has also prompted a reappraisal of priorities, with more than a third (39%) saying that it enables them to fit non-work-related activities into their day and 57% rethinking how they spend their time to ensure it is on the things they value most. 41% of UK consumers are still working remotely and 23% expect their work/life balance to improve as a result.

EY Future Consumer Index

72%

of UK consumers are mixing online and in-store purchasing for major shopping events.

EY Future Consumer Index

41%

of UK consumers continue to work remotely.

Four ways retailers can react to changing consumer values

As UK consumers redefine their new normal, retailers and brands must ensure they are ready to react and deliver that new normal. 

  1. Ruthlessly revisit your offering to ensure it still fits customer needs

    Given the change in consumer values, check to ensure that your range, and your pricing, still meets their needs. Consumers don’t want endless choice but to buy better. Many retailers already rationalised Stock Keeping Units (SKUs) during the pandemic and it remains important to ensure your core range still suits both the value-focussed shopper, who may still be counting the pennies and the aspirational shopper who wants something more, as well as taking into account their new values.

  2. Ensure customers can switch easily between physical and digital experiences

    Consumers today pick and choose when and where to engage with brands. For some that is solely digital, for others it’s a mix of physical and digital. The customer experience must be seamless regardless of channel, enabling integration and switching of channels at all steps of the customer journey. Investment in technology to enable this seamless experience is crucial.

  3. Study your data to understand how your consumer is changing

    Technology investment not only improves the customer experience but allows a better tracking of behaviours. The Christmas 2021 trading period is likely to be the most accurate picture yet of how consumer behaviour has changed so ensure you make the most of it. Exploring your customer data will allow you to pinpoint your customers’ motivations to understand those changes, look at how they impact you and then incorporate them into your 2022 plans.

  4. Evolve your business model to respond to new opportunities

    Using this knowledge, you can evolve your business model to take advantage of new opportunities. The consumer is looking to consume better rather than more, but that doesn’t mean they are not spending. There is greater demand for quality and a willingness to pay for it. The desire for sustainability meanwhile offers opportunities for new offers such as resell or rental models in some sectors.
  • Methodology

    We surveyed 16,000 consumers across the US, Canada, Mexico, Brazil, the UK, France, Italy, Germany, Spain, Denmark, Sweden, Finland, Norway, India, Saudi Arabia, China, Indonesia, Japan, Australia, New Zealand and South Africa during the weeks of 6 through 25 October 2021. The survey questionnaire covered current behaviors, sentiment and intent.

Summary

The pandemic forced consumers to stop and re-evaluate their lives, reappraising everything from working patterns to spending decisions. As UK consumers gradually return to a more normal life, we see that their values and ideals have changed for good and that they are consuming with a heightened awareness around what and how they buy. Consumers are now buying better, rather than buying more, with purchasing more widely influenced by factors such as sustainability, although affordability still also remains a key influencer.

About this article

Authors
Silvia Rindone

EY-Parthenon UK&I Retail Lead, Ernst & Young LLP

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.