Affordability, Value, and the Cost of Living

May 2023

Global consumers are struggling with the cost of living crisis, as inflation remains high while household income growth lags. Consumers are adopting recessionary habits, such as trading down and being more selective in their spending. Rather than competing solely on price, businesses should prioritise value creation and customer loyalty. Tapping into education, food and drinks industries, reverting to service-based products, and investing in tech are further approaches offering opportunities.

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This report comes in PPT.

Key findings

Struggling with the rising cost of living

Global consumers struggle to cope with the cost of living crisis, as inflation remains high whilst household income growth has not kept up with the pace of price rises. In 2023, global inflation is forecast at 7.0%, while the global disposable income per household is expected to decline by 0.2% in real terms over a year earlier.

Balancing budget and lifestyle

Consumers are adopting recessionary habits, such as trading down, being more selective in their spending, and indulging in small pleasures. It is important to remember that the burden of rising costs is not uniform across different incomes, with low-income consumers often impacted the worst by a cost of living crisis.

Consumer spending in cities

The cost of living crisis has highlighted the sensitivity of urban consumers to the rising cost of essentials such as food and utilities. Developing tailored strategies to meet the imminent challenges, especially those faced by the least well-off, is vital to building value for consumers, businesses, and other key stakeholders.

Navigating the new consumer reality

In the new consumer reality, businesses must avoid strategies such as raising prices or reducing pack sizes. Instead, they must shift their focus from solely competing on price to creating value, building consumer loyalty and generating growth.

Where do opportunities lie?

Companies can seize significant opportunities by focusing on education, food, non-alcoholic beverages, and services, as well as investing in technology to provide more value and a greater experience for consumers. The best opportunities benefit all stakeholders by creating avenues for growth, innovation, and value creation.

Key takeaways
Exploring Affordability, Value, and the Cost of Living
Drivers of Affordability, Value, and the Cost of Living
Affordability, Value, and the Cost of Living uncovered
Rising cost of living impacts various income groups differently
How consumers are coping with rising costs
Carrefour expanded its vegan offering with VEGEtal
Consumers are increasingly cautious and selective
Spending on necessities has regional variations across the world’s cities
Cities with inequality face a greater struggle to meet high living costs
London, Canada launches an online tool to improve solar power implementation
Transport for London provides free travel for the lowest-paid contract workers
Differences in urban household spending have public policy and commercial implications
Do more than pass price rises on to consumers
Luxity: Trusted buyer and reseller of pre-owned luxury goods
Nuuly: Unique subscription based service for clothing rental
Selling and communicating value to remain relevant
Opportunities are numerous and varied
Hoogvliet tests new technology and dynamic pricing model
Novameat: Spanish plant-based food using 3D technology
Exploring opportunities to benefit both businesses and consumers
Key takeaways
Affordability, Value, and the Cost of Living: How to win
Evolution of Affordability, Value, and the Cost of Living
Questions we are asking


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