A whopping three out of four of global consumers surveyed in early 2023 say they are concerned that the prices of everyday items are going up. In response, most are adopting new cost-cutting tactics, while others are turning to credit and borrowing resources to bolster their spending power.
Businesses globally are facing changes in consumer markets in the short term, owing to the rising cost of living and increasingly financially cautious consumers. Income and expenditure insights are crucial in identifying how to maintain consumer loyalty and reach increasingly frugal consumers.
Our recent Voice of The Consumer: Lifestyle Survey indicates that over 30% of consumers in Europe intend to put more money aside for savings in 2022. At the same time, over 50% of surveyed Europeans report value for money as a factor of choice when buying household essentials.
The post-pandemic consumer landscape has been transformed by major behavioural shifts on the part of consumers, in terms of how they live, work, play and shop. Key shifts in consumer behaviour – including the adoption of digitalised, home-centric lifestyles, increased concern about social and environmental responsibility, and a greater focus on value – have given rise to new consumer needs and priorities and necessitated the need for companies to rethink their strategies in order to stay relevant in the long term.
Rising inflation has placed the global economy in limbo. With 57% of the global population projected to live in cities in 2022, the rising cost of living is anticipated to put urban consumers in a precarious position, especially in low-income cities where a high share of consumer budgets is devoted to essentials such as food and non-alcoholic beverages and housing.
Inflation is now top of mind for economies, businesses and consumers alike. Rising prices affect consumer purchasing power, while resulting in changes in their spending and shopping behaviour. Growing production costs due to higher raw materials and transportation prices, being coupled with shifting consumer behaviour, mean companies now need to adjust their strategies in order to retain customers, profit margins and growth momentum.
Global middle class consumers are increasingly shifting away from conspicuous and wasteful consumption towards more selective and conscious spending, in a megatrend we at Euromonitor International called the Middle Class Reset. This shift in the middle class mindset and their consumption choices will be long-term and will contribute to shaping the global consumer market of the future.