How first-party data is reshaping consumer marketing

Explore the shift in consumer behavior toward value-driven loyalty in retail.

In brief

• Cost-conscious consumers are opting for retailers who provide value, attractive discounts and convenience. 
• Personal data is the new currency for consumers, encouraging brands to craft personalized loyalty rewards. 
• With the decline of third-party cookies, leveraging first-party data is key for businesses to quickly adapt to consumer trends. 

The macroeconomic landscape in the Nordics is characterized by an aging population, weakening labor market and high interest rates. These economic conditions have resulted in diminishing consumer confidence as individuals grow increasingly concerned about the rising costs of daily essentials such as electricity, gas, water and other household necessities. The ongoing challenges have prompted consumers to think more about the future and consider what is important to them.

However, despite these issues, consumers remain resilient and have a positive outlook for the future. Most Nordic consumers expect their life to be better than today, three years down the line, with Finland being the only exception. This positive outlook is also explained by a comparatively more favorable macroeconomic forecast in the Nordics versus the rest of Europe. 

Our findings from the latest EY Future Consumer Index (FCI) reveal how the ongoing macroeconomic disruptions are altering consumer behaviors. We examine questions consumers are asking today and comment on how brands can offer better service and convenience to respond to consumer requirements. 

Buyer behavior and the rise of private labels

The ongoing macroeconomic challenges have led to consumers emphasizing value and simplicity in their purchasing habits. Therefore, in pursuit of value and quality, shoppers are increasingly gravitating toward private labels, particularly in packaged food, home care, household care, personal care and apparel and footwear. In these areas, private labels are not just alternatives but the preferred choices for a growing segment of the market.  

The rise of private labels is underpinned by a potent mix of economic pragmatism and perceived value. Amid rising living costs, 61% of Nordic consumers acknowledge that private labels are helping them save money, as per FCI 14. In addition, 59% consumers agree that store brands satisfy their needs as effectively as their branded counterparts and an impressive 42% say that private labels are increasingly offering better quality products. Shrinkflation, has only fueled consumer disillusionment toward brands, with a resounding 75% of consumers accusing brands of delivering less value for the same price. 

The emergence of "dupe culture” further exemplifies the waning grip of traditional brands on the Nordic markets. With 27% of consumers actively seeking products that emulate popular or high-end brands at a fraction of the cost, the allure of exclusivity and prestige that once bolstered brand loyalty is diminishing. However, this cultural shift is not uniform across demographics. Millennials are most inclined to embrace private labels as a cost-saving measure, underscoring their pragmatic approach to consumption. Conversely, Gen Z consumers exhibit a greater propensity to invest in branded products.  

As the private label tide continues to rise, brands face the imperative to recalibrate their strategies. The challenge is twofold: to counter the narrative of diminishing value and to innovate in ways that resonate with a consumer base that is more empowered and skeptical than ever before. With 37% of consumers stating they have no intention of returning to branded products after switching to private labels, the message is clear: brands must reinvent themselves to maintain relevance.  

Leveraging first-party data for enhanced consumer experience

Consumers are more inclined to share their personal information when they see value in the exchange, expecting benefits such as discounts, personalization and convenience in return. This expectation is contributing to a decreased dependence on third-party cookies, which have been linked to irrelevant marketing and poor consumer experiences and is driving a significant shift toward a focus on first-party data.  

Brands with established direct-to-consumer channels will benefit from an abundance of first-party data, enabling a smooth transition away from reliance on third-party cookies. This approach also aligns with consumer preferences, as the majority appreciate features such as sale alerts for wish list items, saved login credentials and pre-filled shipping information at checkout — enhancements that streamline and enrich the online shopping journey. However, brands with less developed direct-to-consumer operations may face challenges in accumulating sufficient first-party data to support their marketing initiatives. It is imperative for these brands to start building their competencies early, aligning with their growth plans to capitalize on the evolving digital landscape. 

This shift promises to transform how companies engage with their customers, offering a significant chance for brands and retailers to establish stronger relationships with their audience through more personalized and contextually appropriate shopping experiences. 

Retailers, who have access to extensive and detailed consumer data, can offer additional value to their customers by partnering with brands and allowing them to utilize their media networks in return for tangible benefits. This partnership is an effective strategy for brands to target and connect with consumers and retailers to grow their revenues. And finally, it is consumers who are set to benefit as long as they are able to share their data for maximum returns. 

Special thanks to the following Consumer & Health EY Insight analysts who contributed greatly to the development of this Nordic analysis: Salman Usman Mohammad, Tanmay Moghe, Anmol Mehta and Vikas Dixith, EY GBS India LLP