9 minute read 14 Mar 2024

As shown in our September 2023 data, a UK trend of increasing spend on non-essentials is emerging, although consumers remain cautious.

Woman choosing clothes in a retail store

How 2024 will be the year of the UK consumer revival

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.

9 minute read 14 Mar 2024

A UK trend of increasing spend on non-essentials is emerging, although consumers remain cautious.

In brief
  • Extreme concerns around finances fall as consumers begin to invest in treats, experiences and other discretionary items. 
  • Consumers are beginning to shift back to brands from private label products, as price differentials shrink. 
  • Digital and artificial intelligence (AI), health and wellness, and sustainability will remain key future consumer trends that retailers must embrace. 

As the green shoots of economic recovery start to emerge in 2024, we see in the latest edition of the EY UK Future Consumer Index (FCI) that consumer financial sentiment is finally beginning to stabilise and improve with 13% of UK consumers feeling better compared with four months ago. As of September 2023, consumers reconsider investing in treats and experiences, rather than just worrying about how to pay the day-to-day bills.

Concerns about affordability and cautiousness around finances remain, but it seems they have peaked, and are starting to reduce. At 47%, the number of those extremely concerned about the UK economy is at its lowest point in 18 months, whilst those extremely concerned by the UK cost of living crisis is down by 10 percentage points in the last year.

Positivity has increased since inflation peaked at 10% in October 2022. Since then, the number of consumers expecting their financial situation to remain constant or improve has risen from 57% to 72%. Looking at comparable economies, such as the US, which are further along in their recovery, suggests that the UK could see an upturn in GDP growth once inflation and consumer sentiment return to previous levels, which would propel this positive momentum further. This is in line with the EY ITEM Club’s GDP expectations with consumer spending growth also anticipated to rise to 0.9% in 2024, up from 0.7% projected in the Autumn Forecast.

  • Methodology

    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 a current disruption and which point to more fundamental shifts.

    The latest survey took place from 11 September to 6 October 2023, which surveyed 1,000 respondents from the UK and a further 22,000 respondents across 28 countries including the US, Canada, Mexico, Brazil, Argentina, Chile, 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. 

A greater willingness to spend on discretionary items

Affordability remains consumers’ number one concern at 34% however, suggesting that brands and retailers need to continue to focus their efforts on managing costs and driving efficiencies to deliver value to consumers.

There are some encouraging signs that, as consumer confidence improves, shoppers are becoming more willing to spend in discretionary spend categories, with intent to spend on non-essentials increasing by 4% over the last year.

It is also up in treat categories, where consumers had previously cut back, such as gym memberships and fitness classes (increasing by 3% from April 2023) and beauty and cosmetics (up 2%). In other areas, such as luxury items and other indulgences, consumers remain cautious, but are open to persuasion.

What is clear, however, is that consumers are financing such treats by continuing to be frugal with what they spend on essentials to enable these non-essential spending opportunities.

A shift back to brands from private label

During the COVID-19 pandemic and the subsequent cost-of-living crisis, we saw a switch to private label alternatives to brands as consumers looked to take advantage of cost-saving opportunities. But now we see the preference for buying private label falling, as price differential to brands have shrunk.

Although the majority (38%) still believe that private label goods help them save money and that they are increasingly offering better quality products, more than three-quarters (76%) of consumers feel that private label prices have increased in recent months. More than half (52%) believe that private label/store brands are charging premium prices. Similarly, 55% say that these private label prices are now comparable with their branded competitors, although there is also a strong concern (84%) that some brands have reduced their pack size.

A returned hunger for experience

As consumers move beyond spending on the basics, we see a growth in consumers seeking out experiences. This was a trend that accelerated post-pandemic and then shrank as the cost-of-living crisis hit. More than a third (38%) now want to spend more on experiences and more consumers (43%) are living in the moment rather than planning long-term than they were in October 2022. This hunger for experience is likely to ultimately support growth in a wider range of discretionary categories.

Key trends for the future

As well as identifying trends around consumer confidence and spending, this latest edition of the FCI identifies three key mid-to-long-term themes that are driving the future consumer. Amongst these are the issues of sustainability and health and wellbeing, which have long been key features in the FCI, but we also see the growing impact of digital and AI.

1) Digital and AI

AI investment has been at an all-time high, with retailers globally having invested over US$5.5bB in AI-related deals. A significant amount of the gains has been added in the online channels, with the ability for retailers to offer hyper-personalised experiences through chatbots, promotions and tailored content. Brands have also been leveraging generative AI (GenAI) to create photorealistic ‘“try-on’” options that allow consumers to see clothing on diverse models with varied sizes, skin tones, body shapes and hair types.

In spite of this, increasing familiarity with technology is leading to a new challenge in consumer trust in AI. For instance, confidence in AI driven personalised recommendations dropped from 53% in April 2023 to 42% in November 2023, whilst confidence in AI generated augmented reality product visualisations has dropped from 54% to 46% over the same period. However, the technology is evolving at an unprecedented pace, with the quality of services continuing to improve at an exponential rate, which is likely to support growth consumer trust and adoption over time.

Head of EY UK&I AI lab, Corey Dixon, comments: “Retailers that embrace AI and operate on the technological frontier will be able to create differentiated experiences for consumers. Although a lot of focus has been on operational improvement, deeper and more personalised experiences will allow retailers to drive top-line growth and be differentiated amongst their peers.”

2) Health and wellness

Health and wellness continue to be a priority for consumers, who are consistently looking at investing in improving their lifestyles for a healthier body and mind. For example, 58% are now more aware and cautious about their mental health, up from only 50% in May 2020 when lockdowns had hit. Similarly, 18% will pay extra for products that promote health and wellness.

Technology is rapidly integrating into the health and wellness opportunity here too, playing an increasingly integral role in consumers living healthier lifestyles. The study shows that 39% now manage an existing health condition via their app or smart device and 40% track their regular exercise. Meanwhile, 24% track their calorie intake or diet and 17% are using technology to track their stress levels.

Ravi Degun, UK&I EY-Parthenon Strategy Lead for Health and Life Sciences, comments: “Increasingly health and wellness criteria are driving purchasing behaviour for consumers, with nearly a third saying this will be one of their most important buying criteria in three years. Brands and retailers need to be clear on how their products will align with consumers’ desires to live healthier lives.” 

Technology is empowering individuals to better manage their health and wellbeing


of UK consumers follow a meal plan provided by an app.

The rising cost of living and health


of UK consumers are concerned about getting access to quality healthcare when they need it.

Health and wellness remains a key priority across all consumer segments


of UK consumers are willing to pay extra for products that promote health and wellness.

3) Sustainability

Like health and wellness, sustainability has continued to be a trend that has grown in importance throughout the FCI updates, with consumers increasingly taking actions out of necessity rather than aspiration, particularly as climate change impacts are being felt.

There remains a reluctance to spend more on sustainable products, which is even more apparent amongst older consumers – 18% of Millennials have spent more on sustainable products in the past six months, compared with only 6% of Gen X or Baby Boomers.

Although they may not be willing to pay more, sustainability is having a much more powerful impact on buying decisions, with around 40% of Gen Z and Millennial consumers seeing it as extremely important in the products and brands they choose, compared with around half that for older generations.  

Their behaviour around fuller circularity is also evolving, with two-thirds (66%) of consumers recycling or reusing packaging, for example, 39% attempting to repair products rather than replace them, and 27% buying more second-hand products.

Kim Paykel, UK&I Consumer Sustainability Lead comments: “Consumers are increasingly demonstrating a preference for brands that behave more sustainably. Not all categories are equal with interest in sustainability, but retailers simply can’t ignore the fact that this issue is driving preferences and positive feelings towards brands – particularly for Gen Z consumers.”

What this means for retailers and the actions they should take

The latest FCI shows that consumers are starting to spend again in areas such as discretionary items, experiences and brands – but they are proceeding with caution, with affordability still a concern. To harness this greater willingness to spend, as well as to embrace the three key longer-term consumer trends we identified above, retailers and brands should consider the following key actions:

  1.  Does your value proposition need a reset to win in the new ‘spending again, but with caution’ consumer context?   

    Our FCI data shows an ever-shifting context in how consumers are perceiving value. Many businesses pivoted to ensure their value proposition could combat the increasing preference for private label in the cost-of-living crisis. However, we are now seeing the propensity to buy private label falling and consumers shifting back to brands, as the price differentials between the two have shrunk. It’s clear there is a need for businesses to relook at their value propositions, to ensure they are differentiated, distinctive and offering a clear unique selling proposition (USP).

  2. Are you positioned to win in high-involvement categories?

    High-involvement categories refer to products that require substantial thought and deliberation before purchase due to their high cost, infrequency of purchase, or significance to the consumer. They will require businesses to work hard to stand out from the crowded landscape. It is therefore important to have clarity on what it will take to be differentiated to consumers. For instance, the FCI data is signalling that experiences are important to consumers again. We hypothesise that investing in distinctive experiences may be one way to draw consumers towards your products and portfolio over others.

    Whilst sustainability is growing in importance, we are still seeing a reluctance from consumers to spend more on products purely because they are ‘sustainable’. Yet, health and wellness continue to be a benefit that is deemed worth paying more for. For some businesses, there may be evidence and merit in looking at how their sustainability positioning could be adapted to link more strongly to individual health and wellness benefits. 

  3. Are you unlocking the power of AI to drive top-line growth, or seeing it more as a cost efficiency play?

    The application of AI is one of the most exciting developments for businesses and society in recent memory. Businesses are moving quickly to adapt, yet we are observing more focus on the efficiency side of things and reducing costs. However, we recommend businesses also prioritise investigating how AI could enhance top-line growth through better targeting of consumers and enhanced segmentation. A drive which would also create a learning loop on ways to ensure the value proposition is positioned to win as the consumer context continues to evolve.


As economic hopes grow and cost-of-living concerns fade UK consumers are beginning to spend once more in discretionary categories where they had previously cut back. Whilst value for money will remain key, there are exciting opportunities for retailers and brands to embrace around digital and AI, health and wellness, and sustainability. 

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.