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24 June, 2024
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Consumers cutting back on non-essential items as cost of living rises

Luxury and premium products, travel, and fashion are expected to be hit hardest over the next six months

As the cost of living crisis continues to rise globally, consumers have drastically adjusted their spending behaviors, with the majority (53%) of global consumers “holding back” on non-essential spending. Fifteen percent 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.

50% of consumers are “extremely” or “very concerned” about their personal financial situation

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 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' in order 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 behavior.

Supply chain disruption is shifting in-store/online consumer behavior

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 behavior. 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 to reported concerns.

Luxury/Premium product industry expects to see the greatest decline in consumer spending

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 spending, with 40% indicating they will look to treat oneself/others, whereas 39% view them as better quality. Groceries (24%) had the least reported planned spending reduction.

Sustainable products are in demand by consumers

Despite a planned spending 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, made from recycled, sustainable or eco-friendly materials (77%), or produced by a company with a reputation for ethical practices (75%).

Metaverse: Early stage adoption strong, executives recognize 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-utilized, 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, 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 in India (48%), Vietnam (43%), and Hong Kong (42%), as well as 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.

*PwC surveyed 9,180 consumers from October 24 to November 16 of 2022 via a 15-minute online quantitative survey. Interviews were conducted with consumers in twenty-five participating territories, and the survey was translated into fourteen languages. 

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