Consumer behaviour shifting due to rising costs

June 15, 2024

Cost of living pressures continue to top the agenda for consumers, new data shows.

The latest Future Consumer Index from EY tracks changing consumer sentiment and behaviours right across the world.

23,000 consumers were surveyed across 30 countries, including here in Ireland.

It found that 62% of Irish households, and 55% of global households are extremely concerned about the cost of living.

This outweighed other concerns such as geopolitical conflict, climate change and personal finances.

The cost of essentials like energy, groceries and healthcare emerged as the biggest concerns for households.

However, the report suggests that consumers are optimistic about the future, with 50% saying they are feeling confident, versus 23% who said they are not.

Dr Loretta O’Sullivan, EY Ireland Chief Economist, said there are grounds for cautious optimism for households.

“We are already seeing energy providers reducing prices, a slower pace of food inflation and the European Central Bank has just cut interest rates,” she said.

“These are welcome developments, as is the continuing strength of the labour market,” she added.

This is reflected in the research findings, with over 40% of respondents expecting to be better off in a year’s time.

The EY report suggests that Irish consumers are becoming less loyal to brands.

It reveals that around 50% are willing to switch to private labels to find better value.

This is significantly above the global average of 34%.

It suggests that Irish shoppers are savvy, and are trying to make their money stretch that bit further.

In the past six months, 60% of those surveyed said they have used an online discount code, while over 40% have joined a retailer’s rewards programme.

35% of shoppers said they have joined a mailing list simply to access a discount or voucher.

Consumers are also making lifestyle changes to help stretch their budgets, such as trying to waste less food, seeking to repair items rather than replace them and cooking more at home.

Many are also buying less clothes, shoes, accessories, take-aways and alcohol.

As part of the research, consumers were asked about their views on influencers.

Almost 70% said they trust influencers, while around 60% said they make purchases based off their recommendations.

According to EY, this highlights their increasingly important role in shaping consumer behaviour and marketing strategies.

Cybersecurity is also a concern for Irish consumers. Just 17% said they would continue a membership, subscription or contract with an organisation experiencing a major cyber breach.

In order for businesses to thrive at the moment, Colette Devey, Consumer Products and Retail Lead at EY Ireland said they must invest in innovation right across their operations.

“They must meet customers where they are – whether that is by offering increased value for money via private labels, loyalty programmes and extended ranges, or by offering a seamless experience online and offline,” Ms Devey said.

“Brands and businesses must recognise the increasing weight that consumers place with influencers and their recommendations, however this cannot come at the expense of overall trust in the brand or product

“All of this is no mean feat, but the businesses that strike the balance will be the ones that succeed, as the independent customer increasingly votes with its feet – or its thumb,” she added.

Article Source – Consumer behaviour shifting due to rising costs – RTE

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