As the cost-of-living crisis continues to rise globally, consumers have drastically adjusted their spending behaviours, with the majority (53%) “holding back” on non-essential spending.
Some 15% of consumers 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 that the majority of consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline in planned spend across all categories since the previous pulse survey, June 2022.
Industries, including luxury and premium products, travel, and fashion, expect to see the greatest portion of consumer spending reductions over the next six months, whereas groceries are 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 spending; 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
While more than half of consumers (56%) said rising prices remain the most frequently experienced issue when shopping in-store, supply chain issues also dominate with larger queues and busier store locations (30%), as well as product availability (26%) impacting consumer behaviour.
Supply chain disruptions for in-store shopping appear most prevalent for consumers in Australia (36%), the United States (35%) and India (34%).
For online shoppers, rising prices (48%), product availability (24%), and longer-than-expected delivery times (24%) lead concerns.
Premium product industry
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 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.
Despite a planned spending reduction and a challenging economic environment, consumers 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, made from recycled, sustainable or eco-friendly materials (77%), or produced by a company with a reputation for ethical practices (75%).
Adopting the Metaverse as a shopping channel is still in its early stages; however, the medium remains under-utilised, with only one-quarter (26%) of respondents have used the platform for entertainment, virtual experiences or purchasing products in 2022.
The largest portion of these users have primarily employed the Metaverse for virtual reality (VR), i.e., playing games or watching a movie (10%), joining a virtual world, i.e., experiencing a retail environment or concert (9%), or purchasing a digital product, such as a Non-Fungible Token, or NFT (9%).
Those most likely to engage in metaverse-related activities: are India (48%), Vietnam (43%), Hong Kong (42%), and Millennials (36%).
All the while, as online shopping continues to grow in volume, consumers are increasingly weary of data privacy.
Almost half (47%) say they are extremely or very concerned when interacting with social media companies, third-party/portal travel websites (36%), healthcare (34%), and consumer companies (32%).
Countries, including India and the Philippines, are most concerned across such categories.
As a result, almost half (49%) say they don’t share more personal data than they have to, 32% opt out from receiving communications from these companies, and 26% have overall reduced their interaction with these types of companies.