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Irish consumers prioritise affordability and health, yet remain optimistic about the future, signalling a shift in spending and brand loyalty.
In brief
- Irish consumers are highly concerned about living costs and their health, with many shifting away from brand loyalty.
- Despite economic challenges, there's a sense of control and future optimism among consumers.
- Businesses can capitalise on market trends by focusing on value for money and health-conscious products, as well as embracing digital health solutions.
Affordability, value for money and health concerns are front of mind for Irish consumers. The latest edition of the EY Global Consumer Index has found that 62% of Irish consumers are extremely concerned about the cost of living while 85% are extremely or moderately concerned about their physical health with 79% having concerns about their mental wellbeing.
The cost of essentials like electricity, gas, and groceries along with access to quality healthcare emerged as the biggest concerns. 91% of respondents are concerned about the cost of electricity and gas while 87% are concerned about the cost of healthcare and 80% said they are worried about having access to quality healthcare when they need it.
Concerns about life in the year ahead
Amidst these concerns, there is a silver lining. A notable 57% of Irish consumers feel in control of their life, and 50% are confident about the future over the next three years. This consumer optimism is an encouraging sign, suggesting that despite current challenges, there is a prevailing belief in the ability to manage personal circumstances and a positive outlook towards the future. This sentiment is crucial for businesses to consider, as it indicates a market that, while price-sensitive, is also forward-looking and open to embracing changes that align with consumers’ expectations for a better tomorrow.
A global trend
The findings from Irish consumers were broadly in line with the global survey which revealed that 55% of respondents are extremely concerned about the rising cost of living with 82% having concerns about their physical health and 74% are concerned about their mental wellbeing. Again, a significant proportion of respondents were worried about the high cost of essentials, and access to and the cost of quality healthcare.
Shifting shopping habits
These concerns are causing Irish consumers to prioritise affordability and shift their preferences in favour of essential purchases and cheaper options. 42% of respondents stated that they have either stopped or reduced purchases of certain products or had switched to less expensive alternatives.
Consumers in Ireland are more likely to purchase private label products than their global peers with 50% saying they are happy buying cheaper versions of popular or high-end brands. Just 34% of global consumers said so. Interestingly, almost half of the Irish respondents (49%) said brands are not important for their purchasing decisions – the global figure was similar at 48%. This suggests a challenge for the influence of brands in the face of cost-of-living pressures.
Feelings about consumption and behaviours
Price and health take centre stage
Overall, price, quality of service, and health impacts were the top three considerations for Irish consumers when making purchases. While affordability is the main consideration for many consumers when making spending decisions, health consciousness is rising up the agenda at a time when the performance of the health system is coming under intense scrutiny.
The elevated cost of living is affecting habits, with 49% of Irish individuals indicating they will cook at home more frequently. Notably, the most common activity among Irish consumers when shopping online is utilising a coupon, voucher, or discount code provided by a retailer, at 60%—a figure that is somewhat above the global average of 46%.
The activities performed during online shopping in the last six months
The economic backdrop
These results are not unexpected in light of the surge in inflation in recent years. Consumer prices are significantly higher now than they were across a range of goods and services from electricity and gas to groceries. Encouragingly, the headline rate of inflation has been coming down towards the target level of late and coupled with increases in wages and salaries and the resilience of the Irish economy, should lead to an improvement in consumer sentiment over the coming months.
Business opportunities amidst challenges
Notwithstanding the challenges of a higher-cost, health-focused market, businesses can turn these into opportunities for innovation, customer loyalty, and competitive advantage. It is clear that price is increasingly trumping brand loyalty and that consumers have the means to independently seek out those products that they believe provide the best balance of quality and affordability. In these circumstances, businesses that successfully identify their brands with good value for money can gain market share at the expense of rival products which are perceived to be more costly.
Furthermore, businesses that can meet the health and affordability needs of consumers will be among the winners in the coming years. Once again, innovation has a role to play with low-salt and sugar products likely to become more popular as will those with positive health aspects such as cholesterol-reducing ingredients. However, against a backdrop of affordability concerns, there is unlikely to be a significant price premium available for such innovation. The reward will mainly come in the form of retained or increased market share while maintaining current price points.
A recent EY survey highlights a significant opportunity for Ireland's healthcare sector to adopt digital technologies, addressing public concerns over healthcare costs. With 87% of consumers worried about rising healthcare expenses, there's a strong appetite for digital health solutions that could lower costs and enhance access to quality care.
Summary
With affordability still very much on households’ radar, businesses will need to adapt their product and service offering to meet this reality while simultaneously exploring the opportunities offered by the rise of the health-conscious consumer.