Navigating the Cost-of-Living Crisis

Delivery

This report comes in PPT.

Key Findings

Cost-of-living crisis affects both consumers and businesses

Sharply rising prices and stagnant wages result in squeezed living standards and a decrease in consumers’ real purchasing power. In addition to dealing with decreasing consumer spending, businesses face growing production and operation costs, increasing labour expenses and expanding the cost of debt.

Food, housing and energy are the top three costs consumers are worried about

Increases in prices, political uncertainty, looming recession, and economic slowdown yield negative emotions among consumers. Consumers use social media effectively to draw attention to their country’s cost-of-living crisis. Price hikes of essential products, such as food, housing and fuel, emerge as the most significant concerns.

Businesses need to cater to consumers on two extremes

The cost-of-living crisis affects all consumers, just to a different degree. Rising prices of essential goods and services are detrimental to the lowest-earning cohorts since they have limited abilities to trade down. Meanwhile, upper-middle-class and high-earning consumers also grow more price-value conscious, yet are still willing to spend on discretionary items.

Consumers increasingly choose private label goods and discounters as a first-stop shop

The gap between branded goods and private label is narrowing in terms of quality, innovation and convenience. Previously preferred due to the low prices, private label is often of similar or higher quality than branded goods. In addition, discounters’ foot traffic is also growing, not only due to better value offers but also due to their aggressive expansion strategies.

Top strategies to tackle inflation are increasing prices, decreasing volume and streamlining portfolio

Companies convey part of the increases in operational costs to consumers while also accepting lower profit margins themselves. Brands also use shrinkflation and skimpflation to retain consumers, yet the latter might be perceived as much more deceitful than the former. Focusing on core products while discontinuing the unpopular is another strategy employed.