- 50% of consumers are “extremely” or “very concerned” about their personal financial situation
- Luxury/premium products, travel, and fashion are expected to be hit hardest over the next six months
- Rising prices and supply chain disruption lead shifts in consumer behaviour both in-store and online
- Despite reduced non-essential spending, demand is high for local and sustainable goods
NEW YORK, Feb. 20, 2023 /PRNewswire/ — As the cost of living crisis continues to rise globally, consumers have drastically adjusted their spending behaviours, with the majority (53%) of global consumers “holding back” on non-essential spending. Fifteen per cent have stopped non-essential spending altogether, according to the 2023 PwC Global Consumer Insights Pulse Survey, which captured the views of 9,180 consumers across 25 territories.
The survey also found the majority of consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline since the previous pulse survey, June 2022. Industries including luxury and premium products, travel, and fashion expect to see the greatest portion of consumer spend reductions over the next six months, whereas groceries is expected to decline the least.
Cost of living weighs on consumer confidence
Consumers globally are shifting their consumption habits in-store and online as the cost of living surges and supply chain disruptions impact product availability and delivery times. As a result, almost half (49%) say they are buying certain products when on offer/promotion, 46% are looking to retailers offering better value, 40% are using comparison sites to find cheaper alternatives, 34% are buying in bulk to save cost, and 32% are buying retailers ‘own brands’ to find savings. Demographically, Generation X is the “most-concerned” (47%) and has taken action on non-essential spend, Baby Boomers lead concerns to “some extent” (33%) while taking action, whereas Millennials lead the way when “concerned”, but not changing behaviour.
Supply chain disruption is shifting in-store/online consumer behaviour
While more than half of consumers (56%) said rising prices remains the most frequently experienced issue when shopping in-store, supply chain issues also dominate, seeing larger queues and busier store locations (30%) as well as product availability (26%) impact consumer behaviour. Supply chain disruptions for in-store shopping appear most prevalent for consumers in Australia (36%), United States (35%) and India (34%). For online shoppers, rising prices (48%), product availability (24%), and longer than expected delivery times (24%) lead reported concerns.
Luxury/premium product industry to see the greatest decline in consumer spend
Consumers are planning to reduce their spending across all surveyed retail categories over the next six-months, with the greatest decrease forecast 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 spend, with 40% indicating they will look to treat oneself/others, whereas 39% view them as better quality. Groceries (24%) had the least reported planned spend 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 from consumers
Despite a planned spend 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%).