The glimmer of hope for a move to a more positive post-pandemic world for consumers has been hit with growing economic uncertainties in the past few months, according to the latest EY Future Consumer Index.
Thus, the rising cost of goods and services is impacting 52% of global respondents’ ability to purchase goods and is affecting their purchasing decisions.
While, inevitably, this impacts lower-income earners the most (62%), the survey shows that middle-income earners (48%) and high-income earners (42%) are also being squeezed.
Emerging markets are feeling the pinch strongly, with 62% citing affordability affecting their choices (South Africa 77%, India 64%, Brazil 63%, China 42%).
Driven largely by the inflationary impact on prices and the anticipation of new COVID-19 variants, the survey shows that consumers will continue to rein in their consumption.
Some key items where respondents are spending less include clothing (38%), beauty and cosmetics (35%) and alcohol (30%). Many are seeking cheaper alternatives even for fresh (20%) and packaged food (19%).
Uncertainty around managing rising living costs is driving almost two-thirds (60%) of all respondents to want to save more for the future.
39% of all respondents have made it a goal already to save rather than spend. The biggest savers are in South Africa (56% of all country respondents), Indonesia (54%) and Mexico, Brazil, Argentina.
Out of the five key broad spending priorities – planet first, affordability first, experience first, health first and society first – experience has seen the biggest increase, doubling in priority since 2020.
Experience is now the biggest priority segment in the US (24%), France (26%), India (31%), and Thailand (32%). It remains the smallest segment in Finland (13%) and Australia (15%).
Forty-two percent of all respondents are planning on spending more money on experiences in the next year. However, 39% are less inclined to be involved in experiences outside of their home.
Customers who are venturing out are demanding more from physical stores, with more than a third (36%) planning to only visit stores that offer a great experience.