EY Future Consumer Index: consumers cautious this holiday season to cope with rising cost-of-living and concerns

• 52% of respondents spending less on non-essential consumer goods
• 44% of respondents globally to use less festive lighting and decorations in their homes 
• Health concerns for respondents relating to pandemic receding globally

Many consumer respondents globally are preparing for a more financially cautious and environmentally friendly holiday season as health concerns from the COVID-19 pandemic begin to fade while cost of living and environmental concerns deepen, according to the latest EY Future Consumer Index (FCI).

Consumers are optimistic despite economic challenges

The 11th edition of the global survey of more than 21,000 consumers conducted between 23 September and 14 October 2022, finds that respondents shopping with an ‘Affordability first’ and ‘Planet first’ mindset are jointly the largest spending cohorts, both representing 25% of all respondents. But despite affordability dominating global headlines, the study finds many respondents are approaching the holiday season and beyond with a desire to live sustainable or healthy lives, or to have rewarding experiences. Overall, consumers are optimistic about the future, and 74% are looking forward to getting “back to normal,” after so much disruption caused by the COVID-19 pandemic. While 58% of respondents feel very concerned about the rising cost of living, 59% feel in control of their lives and are eager to catch up on experiences they missed out on due to the pandemic (53%).

With environmental concerns rising, consumers are looking for ways to reduce consumption. Thirty-seven percent will purchase less food for celebratory meals to avoid waste this holiday season, and 44% plan to use less festive lighting and decorations at home. Sixty-seven percent of respondents say they are happy to repair their belongings rather than buy new, with 45% saying they care more about the usefulness of the products they buy. Notably, 63% of respondents globally don’t feel the need to keep up with the latest fashion trends.

But worries over inflation and the economy are still taking precedent for many consumers. 92% of respondents are extremely or moderately concerned by their country’s economy and 87% are concerned by their finances. 89% of respondents state they plan to spend less, or not increase their spending on their families this holiday season and 41% will spend less on gifts for friends. Only 10% won’t change any spending habits because “traditions are traditions” and 39% plan to spend less on vacation travel. Expected changes to household spending will most noticeably be reduced on take out and food delivery with 42% of respondents planning to spend less on this in to next three to four months. 

Many consumers plan to celebrate this holiday season from home

With seemingly unrelenting cost-of-living challenges, “Affordability first” respondents – those that are cost led– are very concerned about the rise of living costs (62%). With 59% of this group only shopping for essentials, their holiday spending won’t be on the latest trending gifts but instead on gifts they feel are useful. Sixty percent of these respondents are spending less on fashion and cosmetics compared with 49% across other respondent consumer groups (“Planet first,” “Experience first,” “Health first” and “Society first”). Many cost-concerned consumers are planning to celebrate at home this year with 50% aiming to spend less this holiday season, reducing going out and cutting spend on food and drink. Japanese respondents are most concerned with affordability (41%) with the lowest groups in India (4%) in China (6%) and Nigeria (11%).

“Planet first” consumers have fewer financial worries. These respondents are less likely to be cutting their spending — unless it’s in an effort to live more sustainability, with 41% intending to buy fewer physical goods for environmental reasons. Forty percent will make sustainable food choices for their celebratory meals this holiday season, compared with just 28% of other respondents. Thirty-seven percent of “Planet first” respondents will look to buy locally made gifts and 40% will purchase less food in a bid to reduce food waste. The study reveals that China and Mexico have the largest group of “Planet first” respondents (35% and 34%, respectively), and the smallest groups are in Japan (12%), Chile (18%), Finland (19%), Norway (20%) and New Zealand (20%).

The FCI also finds that respondents prioritizing societal issues also care for the environment; 70% are deeply concerned about the fragility of the planet and see the holiday season as an important opportunity for them to positively express their social values, in what they buy and how they bring people together. “Health first” respondents, will prefer to avoid the holiday crowds - 74% of these respondents say they are more aware and cautious about their physical health compared with 67% in all other groups.

Kristina Rogers, EY Global Consumer Leader, says:

“With fears of a resurging pandemic finally seeming to lessen, new consumer concerns have entered the arena and focus has shifted to the planet and finances as price increases due to inflation have swept the board particularly in gas, household energy and fresh/package food. The holiday season may be a challenge for many as price increases due to inflation have swept the board particularly in gas, household energy and fresh/package food. With more income now required just to cover the essentials, gifts will be more carefully considered and with an added lens of ‘usefulness,’ companies will need to guide their customers by providing a wide range of price points and information available on the environmental impact of their products.”

Experience led consumers spend more, yet worry more about debt

Unlike “Affordability first,” “Experience first” respondents (63%) are eager to catch up on missed experiences from the pandemic and one in three will spend more on vacations and activities outside the home (35% and 31%, respectively).  But despite a less frugal mindset and a willingness to spend more freely, 41% of “Experience first” respondents are extremely concerned about their household debt. Their overall optimism overrules their concerns, with 50% of this tribe willing to buy non-essentials, services and experiences to bolster happiness. “Experience first” is the biggest of the four groups across Asia (28%), with fewer in Europe as the findings reveal the smallest group of these respondents are located in Sweden, (12%) New Zealand (12%), Finland (12%), the UK (13%), and Italy (15%).

Digital shopping divides consumers

Consumers now have a plethora of channels and destinations for their shopping but not all shop in the same way. As digital continues to grow in prominence, issues of trust, cost and the continued preference for physical channels remain. Thirty-six percent of respondents concerned with the affordability of products will prefer to shop in-store for the holiday period, while 52% have never bought groceries online and nearly half (48%) are not willing to share personal data for personalized recommendations for cheaper alternatives. In contrast, “Experience first” respondents have widened their quest for experiences, with more than a third (36%) purchasing virtual products such as digital skins or interacting with virtual multi-user platforms. Meanwhile, 43% have bought an item directly from social media.

“Society first” respondents reflect their spirit of connection and activism in their digital behavior. They are not more likely than other consumers to use digital technologies, but they are more likely to use them to interact with other people, with 55% reporting that they recently socialized with friends and family on video platforms. “Society first” respondents are the smallest group in all regions and most countries, with their highest shares in China (18%), Nigeria (18%) and Vietnam (17%).

Rogers says:

“Consumers have remained remarkably resilient and continue to shift their priorities in response to emerging disruptions. With “Planet first” now as large a consumer tribe as “Affordability first” and more than half of respondents globally expecting businesses to take the lead to drive positive and environmental change, prioritization in this area is key to unlocking value. Whilst environmental concerns may be stronger in certain countries, saving consumers money and driving sustainable efforts could go hand-in-hand for consumer companies. For example, applying services to extend product lifespans such as repair and resell can act as a way to serve customers concerned with saving costs and those focused on their environmental impact. The EY Future Consumer Index cautions that consumer companies must not only look at global consumer sentiment but understand the nuances and needs of different consumer groups in order to truly understand how best to serve them.”

The latest edition of the EY Future Consumer Index is available at: ey.com/FutureConsumerIndex11

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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 the COVID-19 pandemic, those which point to more fundamental shifts and what the consumer post-COVID-19 might be like. The 11th 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.