Cost of living pressures have affected UK consumers more than their European counterparts, according to the latest EY UK Future Consumer Index.
The twelfth edition of EY’s survey of 1,000 UK consumers found that 62% of UK consumers say they are ‘extremely concerned’ by the cost-of-living squeeze, compared with 50% in the rest of Europe.
The survey found that affordability continues to be felt most keenly by low-income households, with 54% of this group prioritising affordability – up from 42% in June 2022 – compared to a rise from 24% to 39% for middle-income consumers. The proportion of households in the high-income bracket putting affordability first increased from 11% to 17% over the same period.
60% of consumers have noticed price rises, with as many as 87% seeing price rises in fresh and packaged food, compared to 59% in June 2022. UK consumers continue to be more open to private label with 80% willing to buy private label packaged food compared to only 50% of their European counterparts.
Silvia Rindone, EY UK&I Retail Lead, said “Our latest survey shows the strain the ongoing cost-of-living squeeze is having on UK consumers who are making more considered decisions about how and where they spend their money. This challenging, highly-price sensitive environment means brands and retailers need to work harder than ever to understand the factors influencing the UK consumer and re-evaluate ranges and pricing to better meet their needs.”
Rising costs are creating new obstacles for the environmentally conscious consumer as well, hampering their ability to embrace sustainable products. More than half (56%) of consumers surveyed by EY said sustainable products cost too much, while 71% said that price put them off purchasing.
Environmental ideals have not disappeared completely though: the research found that frugal consumer behaviours are now translating into green behaviours – with affordability at the heart. Half (50%) of the consumers surveyed said they take environmental action when it will save them money, with trends such as ‘repair rather than replace’ continuing to see growth, up from less than half (49%) in February 2022 to more than two-thirds (68%) in April 2023.
After accelerated growth during the Covid pandemic, online shopping has become the new normal, and opportunities are arising for retailers as consumers become more familiar with different types of technology. Nearly half (45%) of consumers surveyed said they are comfortable when AI is used to improve their shopping experience and a similar amount (43%) are comfortable using a chatbot for customer queries.
Where consumer trust is lacking, however, is their willingness to share data – even when they could benefit. The number of consumers not willing to share data to get cheaper product recommendations has risen from 32% in February 2022 to 41% in April.
Silvia Rindone added “As online penetration peaks and consumers become more accustomed to purchasing across a variety of channels, retailers need to capitalise on the opportunities that data and AI can offer in order to win new business and improve consumer confidence. Being smart with the data will enable businesses to enhance their value proposition, delivering the right product at the right, affordable price.”