Consumers are optimistic despite the economic difficulties at Christmas
Consumers are more cautious this Christmas, due to the increased cost of living
Consumers are more cautious this Christmas, due to the increased cost of living, but also concerns about the environment, according to the 11th edition of EY's global survey, Future Consumer Index (FCI), which was conducted between September 23 and October 14 2022, with a sample of over 21.000 consumers.
The research finds that the two strongest groups of consumers are those who, when shopping, place affordability first (Affordability first) and the planet (Planet first), as they each represent 25% of all participants . Despite the issue of punctuality and the cost of living dominating global headlines, the survey finds that many respondents approach the holiday season with a desire to live a more sustainable or healthy life, or to have rewarding experiences. Overall, consumers appear optimistic about the future, with 74% looking forward to "getting back to normal", following the disruption caused by the pandemic COVID-19. While 58% of respondents are very concerned about the rising cost of living, 59% feel in control of their lives and are willing to make up for the experiences they missed due to the pandemic (53%).
With environmental concerns on the rise, consumers are looking for ways to reduce consumption. 37% will buy less food for holiday meals to avoid waste this holiday season, while 44% plan to use less holiday lighting and decorations at home. 67% of respondents say they have no problem repairing their possessions instead of buying new, with 45% saying they care more about the utility of the products they buy. At the same time, 63% of respondents worldwide do not feel the need to follow the latest fashion trends.
However, concerns about inflation and the economy still dominate for many consumers. 92% of respondents are very or moderately worried about their country's economy, while 87% are worried about their personal finances. 89% say they plan to spend less or no more on their families this holiday season, while 41% will spend less on gifts for friends. Only 10% will not change their consumption habits because they stick to traditions, while 39% will spend less on travel during the holiday season. A significant reduction is also expected in household spending on take out and delivery, as 42% of respondents plan to spend less in the next three to four months.
Consumers are planning holidays at home
With cost of living issues remaining acute, cost-first participants, i.e. members of the Affordability first group, are very concerned about the rising cost of living (62%). With 59% of this group buying only the essentials, their holiday spending will not be on gifts that are "trendy", but on gifts they believe are useful. 60% of consumers in this group spend less on fashion and cosmetics, compared to 49% of other groups who prioritize planet, experience, health and society. Many cost-conscious consumers are planning to celebrate at home this year, with 50% of them planning to spend less this festive season by cutting back on going out and cutting back on food and drink.
Consumers in the Planet first group have fewer financial worries and are less likely to cut back on spending, except as part of their effort to live more sustainably, with 41% planning to buy fewer goods for environmental reasons. 40% will make sustainable food choices for their holiday meals this year, compared to just 28% of other participant groups. 37% of respondents from the planet-first group will seek to buy locally produced gifts, while 40% will buy less food in an effort to reduce food waste.
The research also finds that respondents who give priority to social issues (Society first) also care about the environment. 70% are deeply concerned about the dangers that threaten the planet and see the holiday season as an important opportunity to positively express their social values in what they buy and how they bring people together. Members of the Health first group will prefer to avoid crowded gatherings during the holidays, with 74% of them saying they are more aware and careful about their physical health, compared to 67 % of the members of the other groups.
In contrast to the group of consumers who are concerned about the cost of their purchases, 63% of those who answered that they prioritize experiences (Experience first) are willing to make up for the experiences lost during the pandemic, with one in three stating that they will spend more on holiday travel and activities outside the home (35% and 31%, respectively). Despite the willingness to spend more freely, 41% of respondents in this category are particularly concerned about their household debt. However, their overall optimism outweighs their concerns, with 50% of this group willing to buy non-essential products, services and experiences to be happier. This group ranks first across Asia (28%), but is less numerous in Europe, with its share limited to 12% in Sweden and Finland, 13% in the United Kingdom, and 15% in Italy.
Digital markets are dividing consumers
Consumers now have a multitude of channels and destinations for their shopping, but not everyone shops the same way. While the importance of digital media continues to grow, issues of trust and cost continue to concern consumers, with many continuing to prefer brick-and-mortar stores. 36% of respondents who prioritize cost (Affordability first) will prefer to shop in physical stores for the holiday season, while 52% have never shopped for groceries online and nearly half (48%) are unwilling to share their personal data to receive personalized recommendations for cheaper alternatives. In contrast, Experience First members have broadened their search for experiences, with over a third (36%) purchasing virtual products, such as digital skins, or using virtual multi-user platforms. Meanwhile, 43% have purchased an item directly from social media.
Society first group members' willingness to connect and activism is reflected in their digital behavior, according to the survey. While they are not more likely to use digital technologies as often as other consumers, they are more likely to use them to interact with other people, with 55% reporting that they have recently interacted with friends or family through video platforms. This group is the smallest group in all regions and most countries.