Financial services – EY Future Consumer Index: Consumers losing trust and turning away from brands amid cost-of-living crisis – Brief

EY Future Consumer Index: Consumers losing trust and turning away from brands amid cost-of-living crisis

• Majority of consumer respondents (94%) concerned about rising living costs
• Concerns for health rise seven percentage points
• Data reveals eroding consumer trust in retailers and consumer products companies

Consumers globally continue to reign in their spending amidst a challenging cost-of-living environment, with 94% of consumers now worried about the rise of living costs as they continue to navigate inflation.

Affordability is now the leading concern for 35% of consumer respondents globally, the 12^th edition of the EY Future Consumer Index (FCI), reveals, increasing 10 percentage points since October 2022 and remaining the largest consumer segment.

The data also reveals that people in both developed and emerging countries are making dramatic, short-term lifestyle changes to cope with ongoing disruption. Out of the five consumer segments – “planet first,” “experience first,” “society first,” “health first” and “affordability first”– “planet first” saw the biggest decrease (-9 percentage points, from 25% to 16%) reaffirming the switch consumer respondents are making to prioritize affordability, now seeing sustainability as less of a concern.

Notably, the data reveals the health first consumer group increased by 7 percentage points (from 17% to 24%) since October 2022 to become the second largest segment behind affordability for the first time since May 2023. This significant increase indicates consumers are focusing on short-term lifestyle changes and reprioritizing individual needs over collective efforts, focusing on their own finances, health and stress levels. China’s planet first group also dropped 17 percentage points (from 35% to 18%) as affordability concerns rose 14%.

Consumers turn away from brands in search of affordability

With today’s economic uncertainties showing no signs of easing, 92% of respondents are concerned with their country’s economy and 39% expect the situation to get worse over the next six months. Consumer respondents are taking action to reduce spending in many areas of their lives, with more than a third (36%) planning to spend less on clothes, 44% expecting to buy less take-away food and nearly half (49%) planning only to spend on essential products. Affording the essentials also remains a challenge for many consumer respondents. More than three quarters (79%) feel prices for food have increased in the past three to four months and 74% have noticed some brands have reduced their pack sizes without reflecting changes in the price, otherwise known as “shrinkflation”

The data indicates brands are no longer the only way to communicate status for the majority of consumers as 62% of respondents globally don’t feel the need to keep up with the latest fashion trends and half would now consider private label for clothing, shoes and accessories. A large proportion (67%) now prefer to repair rather than replace their possessions, challenging the traditional consumer desire of having to always own the latest things. 55% of consumers globally say brands are no longer important.

Georgiana Iancu, Partner, Indirect Tax Practice Coordinator, and Retail and Consumer Products Sector Leader, EY Romania: “Consumers remain resilient to cost-of-living pressures amplified by the inflationary backdrop. We are seeing a rethink of lifestyles to make room for essential spending. At the same time, building also on lessons learned in the pandemic, consumers are already regular users of digital technology, becoming increasingly reliant on it to make their lives easier, save money, time, work from home and reduce their environmental impact. This means brands will have to rethink their strategy to keep their market share and stay competitive by addressing the consumer’s primary concerns: affordability and health first.”

Technology is intrinsically part of consumer life

The EY Future Consumer Index reveals almost half of (46%) consumer respondents rely on technology to manage their daily lives. This growing reliance on technology and its outputs and recommendations are also shaping purchase decisions and overall consumption. Across mainstream technologies, the data reveals almost half of consumer respondents (46%) have used online grocery delivery services in the last three months, a 12-percentage point rise since June 2022. Fifty-three percent of respondents have socialized with friends and family over video platforms, a significant 14 percentage point rise since June 2022, and 62% now listen to audio streams, a huge 17 percentage point increase from June 2022. Emerging technologies also saw a sharp uptake, with more than double the number of consumer respondents globally now using virtual multi-user platforms when compared with June 2022. Notably, 66% of respondents said they are willing to share their data in exchange for cheaper alternatives.

The latest edition of the EY Future Consumer Index is available at: ey.com/FutureConsumerIndex12

About EY Romania

EY is one of the world’s leading professional services firms with 365,399 employees in more than 700 offices across 150 countries, and revenues of approx. $45,4 billion in the financial year that ended on 30 June 2022. Our network is the most integrated worldwide, and its resources help us provide our clients with services allowing them to take advantage of opportunities anywhere in the world.

With a presence in Romania ever since 1992, EY provides, through its more than 900 employees in Romania and the Republic of Moldova, integrated services in assurance, tax, strategy and transactions, and consulting to clients ranging from multinationals to local companies.

Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. In 2014, EY Romania joined the only global competition dedicated to entrepreneurship, EY Entrepreneur Of The Year. The winner of the national award represents Romania at the world final taking place every year in June, at Monte Carlo. The title of World Entrepreneur Of The Year is awarded in the world final. For more information, please visit: www.ey.com

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About the EY Future Consumer Index

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 12th edition of the EY Future Consumer Index surveyed 21,000 respondents across the US, Canada, Mexico, Brazil, Argentina, Chile, UK, 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.