Cost of living pressures continue to top the agenda for consumers according to the latest edition of the EY Future Consumer Index of 23,000 consumers globally.
The index reveals almost two thirds (62%) of Irish – and 55% of global – households extremely concerned about the cost of living, outweighing concerns around geopolitical conflict (39%), climate change (38%),personal finances (36%) and the economy (33%).
Despite these ongoing pressures, however, Irish consumers on the whole retain a positive outlook with more than twice as many confident about the future compared to those who are not (50% vs 23%), and almost four times as many stating they feel in control (57% vs 15%). The research also finds clear evidence of the rise of the Independent Consumer, with households in Ireland showing markedly less brand loyalty and a willingness to switch to private labels (48%) or cheaper versions of high-end brands (50%) in search of value, a figure significantly above the global average (34%).
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These are some of the key findings of the 14th edition of the EY Future Consumer Index, which surveyed more than 23,000 consumers across 30 countries, including Ireland. Looking to the future, price, quality of products and health impacts were expected to be the most important purchase criteria in three years’ time. In particular, Irish consumers say they were planning to be more aware and cautious around their physical health (80%) and mental health (75%), indicating that as inflationary pressures ease, healthcare appears likely to take centre stage for future consumers.
Rise of the Independent Consumer
The rise of the Independent Consumer, who is savvy and keen to make their budget stretch, is particularly apparent with online shopping behaviours. In the past six months, six in ten Irish shoppers say they have used an online discount code, four in ten (42%) have joined a retailer’s rewards programme, and more than one in three (35%) say they have joined a mailing list simply to access a discount/voucher.
When it comes to shopping online, the independent consumer is happy for product researching and selection to be carried out autonomously, with less than one in five (18% & 19% respectively) saying that it is important to have human interaction available during these stages of the shopping journey. Irish consumers still want to be able to access and engage with people if an issue occurs, however, such as product returns and refunds (60% say it’s very important) or post-purchase for queries/complaints (62%). However, cybersecurity online is also a major concern for Irish consumers, with just 17% saying that they are willing to continue membership, subscription or contract with an organisation experiencing a major cyber breach.
Influencers are also having an increasing impact, with 39% of Irish consumers engaging online with them, with a high proportion of these saying that they trust influencers (67%) and almost six in ten (58%) of these making purchases based on their recommendations, highlighting their increasingly important role in shaping consumer behaviour and marketing strategies.
Looking to the future almost half of Irish consumers (48%) say they plan to consolidate shopping trips into less frequency but larger purchases – a ‘Big Shop’ – and say they have a preference for shops that provide a ‘great experience’ (36%), with more than one in three (36%) saying that they expect to shop online for products they had previously bought in stores.
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Colette Devey, Consumer Products and Retail Lead at EY Ireland, says “Cost of living challenges continue to be front of mind for both Irish and international consumers, which in turn is driving the rise of the Independent Consumer. Consumers remain acutely aware of their spending, however, this focus on price is matched by continuing preference for both high quality and good value.
To square this circle, we are seeing consumers acting more consciously and independently than in previous times. Brand loyalty is often taking a back seat, the switch to own brands or cheaper versions of premium products is continuing, while cooking at home or repairing rather than replacing are also notable. Online, consumers are willing to sign up to mailing lists or download apps in search of discounts and better value.
“Consumer trust is crucial in today's digital era, which is marked by information overload and frequently misleading products claims. Online influencers are increasingly stepping into the trust gap here, acting as advisors and recommenders for consumers. Our research also finds that cybersecurity is a non-negotiable for consumers, with a cyber-attack likely to deal a hammer blow to consumer loyalty for an organisation or product.
“For businesses to thrive in this environment they must invest in innovation right across their operations, and 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. 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.”
Cost of living remains front of mind
The latest edition of the EY Future Consumer Index also demonstrates how cost of living challenges in the wake of the pandemic and the ongoing conflict in Ukraine continue to be front of mind for households here in Ireland and globally. The cost of essentials like energy (66%), groceries (61%) and healthcare (57%) emerged as the biggest specific concerns of Irish householders.
Irish consumers have shown a preference to be more economical and stretch their budgets, trying to waste less food (92%) or seeking to repair items rather than replace (65%). Looking to the future almost half (49%) plan to cook more at home. And while purchases of fresh and packaged foods (64%), medical supplies (63%) and grocery staples (62%) have remained at current levels, a notable portion of Irish respondents say that they are purchasing less clothing, shoes, and accessories (43%), and buying fewer alcoholic beverages (36%).
Irish consumers also say they are planning to spend more time at home (44%), with one third expecting to increase hosting and entertaining at home. Almost half (49%) expect to spend more time cooking their own meals, while more health focused consumers say they plan to reduce the number of takeaways (54%) and to cut down on buying pre-prepared meals from a supermarket (47%).
Commenting on the macroeconomic landscape, Dr Loretta O’Sullivan, EY Ireland Chief Economist, says: “It has been a tough period for many households but there are grounds for cautious optimism about the future. We are already seeing energy providers reducing prices, a slower pace of food inflation and the European Central Bank has just cut interest rates. These are welcome developments, as is the continuing strength of the labour market. Jobs are being created and wages are rising, signalling an uplift in consumers’ financial situations. This is reflected in our research findings, with 42% of respondents expecting to be better off in a year’s time. All of which gives us reason to believe that consumer spending growth is in prospect for Ireland.
Digital Health Solutions Can Support Growing Consumer Focus On Physical And Mental Health
A particularly notable signal emerging from the Index was the clear indication from consumers that they are expecting to focus more on their health in future years. Eight in ten (80%) Irish respondents said they planned to be more aware and cautious around their physical health, while three quarters (75%) said that mental health would be a focus.
Digital technologies will play an increasingly important role in meeting this demand from Irish and international consumers. Last year, EY Ireland’s Consumer Health Survey of over 1,000 people found that the Irish public was ready to embrace digital health technologies and digitally enabled pathways of care, including a willingness to share their health data to improve health outcomes and access to care.
Colette Devey says, “This openness to technology provides significant opportunities for Ireland's healthcare sector and for businesses to lean into digital technologies to deliver the care that Irish consumers want right now and which they say will be an increasing focus for them in future”.
