EY Future Consumer Index Reveals Dramatic Shifts in Shopper Behavior Amid Inflation and Rising Costs

Shoppers and brands now operate according to completely new principles in a consumer environment that is undergoing rapid transformation. Market changes have created a dramatic shift in how people make their purchasing decisions because of economic instability, inflationary pressure and cultural value transformation.

Consumers are now thoroughly examining their purchasing decisions, while retailers and brands must demonstrate their worth because customers have become more price-conscious and have developed new expectations, according to the EY Future Consumer Index report, which reveals essential market changes via its survey of more than 20,000 consumers across 26 countries.

The 30-page report reveals that higher living expenses and intensifying economic challenges are causing customers to abandon their loyalty to brands. The survey shows that purchasing decisions no longer include brands for 34 percent of respondents, while 88 percent of those polled believe brand messages fail to connect with their personal needs and values.

The high cost of living concerns consumers the most, according to the research findings, which show that 55 percent of respondents share this worry. The economic future of their nations keeps Millennials (50 percent) and Gen Z (43 percent ) up at night. Price sensitivity is the most important factor in purchase decisions for 81 percent of consumers polled worldwide.

Respondents who felt the most intense pressure from inflation came from the U.S. (61 percent), France (60 percent) and the U.K. (58 percent). Different regions also showed different levels of economic concern worldwide. The survey results found that 16 percent of Chinese consumers do not consider rising living expenses their main concern, which was a much lower rate than in other countries in the report.

One top takeaway from the survey was the “increasing adoption of private label products” among respondents, who are turning to store brands as a cheaper alternative. Of those polled, 67 percent said private label “satisfies their needs just as well as branded products,” the report’s authors said, adding that 30 percent of respondents “say they no longer consider brands at all when making purchasing decisions.”

And even when brands turn to innovation and “brand improvements,” such as changing ingredients or formulas to create more value, the report noted that 42 percent of respondents “believe these are simply cost-cutting exercises and not genuine innovation.” The report also found that 88 percent of respondents said they do not think that brand messaging matches their needs and values, “and with 54 percent of respondents only buying branded products when they are on sale, consumers are prioritizing discounts over brand loyalty.”

The data also shows that the drivers of private label adoption vary by both generation and by country. “In China, Gen Z is driving the shift: on average 37 percent of China’s Gen Z respondents consider private label across categories, influenced by ‘dupe’ culture, where consumers seek cheaper ‘duplicates’ of more expensive items and smart, frugal choices are a form of status,” the report noted.

In contrast, in the U.S., the researchers said private label adoption is highest among older consumer respondents, “particularly in food and cleaning and household products” while in Europe, specifically Germany, “private label adoption is being driven by older generations across all product categories when compared with China and the U.S.”

Rob Holston, EY global and Americas consumer products sector leader, said consumer behavior has historically shifted during economic downturns, “but today’s changes appear to be more fundamental. Unlike past cycles, where consumers returned to familiar brands post-crisis, prolonged inflation, supply chain disruptions and geopolitical instability have reshaped habits permanently.”

In response, Holston said retailers and brands are introducing private labels with confidence, “allocating prime shelf space, and technology is bringing a new dimension by giving consumers the keys to endless choice and comparison.” He said consumer products companies “have a prime opportunity to strengthen their connection with consumers and to stay relevant by adapting to evolving expectations.”

“The survey findings tell us it’s simply not enough to be just good enough,” Holston said. “This has been the message to retailers in the past, and now it’s the turn of big brands. Brand loyalty is in the balance and consumers aren’t just buying names anymore – they’re buying value, quality, purpose and performance. Brands that don’t adapt will struggle, while those that evolve can capture new loyalty in an ever-shifting market. This is a perfect time for brands that can sharpen their messages and target their audiences, to break out and gain market share.”