As the cost of living crisis continues to rise globally, consumers have drastically adjusted their spending behaviours, with the majority (53%) of global consumers “holding back” on non-essential spending. Fifteen per cent 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 the majority of consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline since the previous pulse survey, June 2022. Industries including luxury and premium products, travel, and fashion expect to see the greatest portion of consumer spend reductions over the next six months, whereas groceries is 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 spend, 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 is shifting in-store/online consumer behaviour
While more than half of consumers (56%) said rising prices remains the most frequently experienced issue when shopping in-store, supply chain issues also dominate, seeing larger queues and busier store locations (30%) as well as product availability (26%) impact consumer behaviour. Supply chain disruptions for in-store shopping appear most prevalent for consumers in Australia (36%), United States (35%) and India (34%). For online shoppers, rising prices (48%), product availability (24%), and longer than expected delivery times (24%) lead reported concerns.
Luxury/premium product industry to see the greatest decline in consumer spend
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 still 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.
Sabine Durand-Hayes, Global Consumer Markets Leader, PwC France, said:
The cost of living crisis is having a material impact on how consumers purchase, both in-store and online. As prices rise, consumers globally are cutting back on non-essential spend, while spending more time looking for cheaper alternatives. While every industry surveyed shows an anticipated decline in spend over the next six months, we are nevertheless seeing consumers continue to prioritise products that are ethically produced and sustainable. If retailers are to thrive in this challenging macroeconomic environment and maintain consumer engagement, they must leverage and diversify their distribution channels, offer competitive pricing, invest in greater supply chain resilience, and compensate for customers’ increasing reluctance to share data online by better monitoring their customer base and loyalty programs.
Sustainable products are in-demand from consumers
Despite a planned spend reduction and a challenging economic environment, consumers say they 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, or made from recycled, sustainable or eco-friendly materials (77%), or produced by a company with a reputation for ethical practices (75%).
Consumer channels
In the previous pulse released June 2022, consumers’ frequency of daily/weekly shopping – which had been on an upward trajectory during the pandemic – looked to be shifting back to pre-COVID times. In this pulse, continued stability shows the majority of consumers expect little change in their shopping channel habits across online, in-store and click and collect in the next six months. In-store shopping remains largely stationary year-on-year as the most common medium of consumption in 2022 (43%), whereas use of mobiles/smartphones (34%), PCs (23%), and tablet consumption (15%) have all marginally declined. The survey finds there is a continuing trend in consumers stating they never purchase products via tablets (51%), smart home voice assistance (64%) and wearable devices (71%). These numbers are all on the rise since the last PwC Global Consumer Insights Pulse Survey in June 2022.
Metaverse: Early stage adoption strong, executives recognise the importance of risk management, cyber security, governance considerations
Adoption of the Metaverse as a shopping channel is still in its early stages of adoption, however the medium still remains under-utilised, with only one-quarter (26%) of respondents having 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., experience 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: India (48%), Vietnam (43%) and Hong Kong (42%), as well as Millennials (36%).
All the while, as on-line 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% are opting-out from receiving communications from these companies, and 26% have overall reduced their interaction with these types of companies.
Roberto Hernandez, Global Metaverse Leader and Chief Innovation Officer, PwC US, said:
As an immersive digital platform, the Metaverse represents a significant opportunity for business transformation, particularly as a way to extend the shopping experience before and after a purchase takes place and to enhance the engagement with younger generations such as Gen Z customers, which are looking for more engaging and community connected experiences. At the same time, consumers are increasingly cautious of their data privacy, so retailers must ensure they are reflecting consumer attitudes in their immersive experiences if they are to see growth in online consumption.
In the last six months, one in four consumers told us they used the Metaverse. That is an incredible number indicating that the technology is becoming a more prominent part of the consumer experience. Although macroeconomic factors in today’s marketplace may impact consumers in the short term, the future remains increasingly bright for the technology.
