PwC Global Consumer Insights Survey explores the ways in which consumers are responding to the “cost of living crisis”, and how retailers can adapt to the current climate.
The new 2023 PwC Global Consumer Insights Pulse Survey has revealed that the “cost of living crisis” is causing consumers worldwide to shift their consumption habits and drastically adjust their spending behaviors. The majority of global consumers are holding back on non-essential spending, with 15% stopping non-essential spending altogether.
Over the next six months, the survey found that the majority of consumers expect to reduce their expenditure across all surveyed categories. The luxury/premium product industry, travel, and fashion industries are expected to experience the greatest portion of consumer spending reductions, whereas groceries will decline the least.
The cost of living weighs on consumer confidence
As the cost of living continues to rise and supply chain disruptions impact product availability and delivery times, global consumers are shifting their consumption habits both in-store and online. Nearly half (49%) of consumers are now purchasing certain products when they are on offer/promotion, while 46% are seeking out retailers that offer better value. In addition, 40% are utilizing comparison sites to find more affordable options, 34% are buying in bulk to save on costs, and 32% are opting for retailers’ own brands to find savings.
When it comes to demographics, Generation X is the most concerned (47%) and has taken action by cutting back on non-essential spending. Baby Boomers, while somewhat concerned (33%), have also taken action to address the issue. Meanwhile, Millennials express the most concern about rising costs, but have not yet changed their buying behavior significantly.
Supply chain disruption is shifting in-store/online consumer behavior
While more than half of consumers (56%) said rising prices remain the most frequently experienced issue, supply chain issues also dominate. They are causing long queues and busy store locations (30%) and affecting product availability (26%). Rising prices (56%) remain the most commonly experienced issue for consumers. Australia (36%), the United States (35%), and India (34%) have the most affected consumers when it comes to in-store shopping.
Online shoppers report rising prices (48%), product availability (24%), and longer-than-expected delivery times (24%) as their top concerns due to supply chain disruptions.
Luxury/premium product industry will see the greatest decline in consumer spending
Consumers are planning to reduce their spending across all surveyed retail categories over the next six months. The greatest decrease forecast is in luxury/premium products or designer products (53%), travel (43%), virtual online activities (42%), and fashion – such as clothing and footwear (41%).
However, there still remains an appetite for future spending. 40% indicate they will look to treat oneself/others, whereas 39% view them as better quality. Groceries (24%) had the least reported planned spending reduction.
Sabine Durand-Hayes, Global Consumer Markets Leader, PwC France, said:
The cost of living crisis is having a material impact on how consumers purchase, both in-store and online. As prices rise, consumers globally are cutting back on non-essential spend, while spending more time looking for cheaper alternatives. While every industry surveyed shows an anticipated decline in spend over the next six months, we are nevertheless seeing consumers continue to prioritise products that are ethically produced and sustainable. If retailers are to thrive in this challenging macroeconomic environment and maintain consumer engagement, they must leverage and diversify their distribution channels, offer competitive pricing, invest in greater supply chain resilience, and compensate for customers’ increasing reluctance to share data online by better monitoring their customer base and loyalty programs.
Sustainable products are in-demand
Despite a planned spending reduction and a challenging economic environment, consumers say they are still willing to pay more for sustainable product types.
Overwhelmingly, more than three-fourths (78%) are willing to pay higher for a product that is produced/sourced locally, or made from recycled, sustainable or eco-friendly materials (77%), or produced by a company with a reputation for ethical practices (75%).
The majority of consumers surveyed expect little change in their shopping channel habits across online, in-store, and click-and-collect locations in the next six months.
In-store shopping remains largely stationary year-on-year as the most common medium of consumption (43%). The use of mobiles/smartphones (34%), PCs (23%), and tablet consumption (15%) have all marginally declined.
The survey finds there is a continuing trend in consumers stating they never purchase products via tablets (51%), smart home voice assistance (64%), and wearable devices (71%).
Metaverse: Early-stage adoption
Adoption of the Metaverse as a shopping channel is still in its early stages, however, the medium still remains under-utilized. Only one-quarter (26%) of respondents have used the platform for entertainment, virtual experiences, or purchasing products in 2022.
The largest portion of these users has primarily employed the Metaverse for virtual reality (VR). They used VR for:
- Playing games or watching a movie (10%);
- Joining a virtual world to experience a retail environment or concert (9%);
- Purchasing a digital product, such as a Non-Fungible Token, or NFT (9%).
Those most likely to engage in metaverse-related activities: India (48%), Vietnam (43%), and Hong Kong (42%), as well as Millennials (36%).
Roberto Hernandez, Global Metaverse Leader, and Chief Innovation Officer, PwC US, said:
As an immersive digital platform, the Metaverse represents a significant opportunity for business transformation, particularly as a way to extend the shopping experience before and after a purchase takes place and to enhance the engagement with younger generations such as Gen Z customers, which are looking for more engaging and community connected experiences. At the same time, consumers are increasingly cautious of their data privacy, so retailers must ensure they are reflecting consumer attitudes in their immersive experiences if they are to see growth in online consumption.
Importance of cyber security
As online shopping continues to grow in volume, consumers are increasingly weary of data privacy.
Almost half (47%) say they are extremely or very concerned when interacting with social media companies, third-party/portal travel websites (36%), healthcare (34%), and consumer companies (32%). Countries including India and the Philippines are most concerned across such categories.
As a result, almost half (49%) say they don’t share more personal data than they have to. 32% are opting-out from receiving communications from these companies, and 26% have overall reduced their interaction with these types of companies.
About the Survey
PwC surveyed 9,180 consumers from October 24 to November 16 of 2022 via a 15-minute online quantitative survey. Interviews were conducted with consumers in twenty-five participating territories, and the survey was translated into fourteen languages.
The full findings can be accessed at www.pwc.com/gx/en/industries/consumer-markets/consumer-insights-survey.html.