December 11th, 2023, Clifton Mark
At the end of the year, we at YouGov like to round-up the global trends and insights we’ve seen in the FMCG and retail sectors. For 2023, we saw three big themes: cost-of-living caution, digital disillusionment and sustainability skepticism.
Cost-of-living caution: where are FMCG/retail customers the most price-sensitive?
In 2023, consumers all over the globe felt the pinch of inflation. In January, half of all global respondents (50%) reported a decrease in their disposable income compared to the previous 2022. And an even greater proportion (62%) worried about the impact of inflation on their spending in the coming year. This phenomenon hit particularly hard in Great Britain, where 62% saw their disposable income decline, but affected fewer in India (40%) and Hong Kong (39%).
In response to inflation worries, most consumers (63%) expected to cut household spending in 2023, as well as deploying more money-saving shopping tactics than they did in the previous year. With consumers ready to switch to cheaper alternative products and hunt for sales, value-focussed brands had plenty of opportunity for growth.
While times are tough pretty much all over, consumers tend to be much more careful with some types of retail goods than others. Going into 2023, YouGov asked consumers where they were most price-conscious, meaning they are aware of price changes and would take action in response to hikes by shopping around, substituting products or foregoing a product altogether.
Grocery prices are the most price-sensitive category of product, with 55% of respondents saying they are price-conscious when it comes to food. Yet despite attempts to control grocery spending, nearly half of consumers (46%) expected to spend more on groceries in the last half of 2023 than they did in the first.
Consumers are also watching clothing and shoe prices closely, with 35% ready to shop around or keep wearing last season’s styles in the event of price rises.
Purveyors of health and beauty products should also take heed. A fifth of global consumers say they’re price-conscious about medicine and healthcare products (20%) and cosmetics and beauty products (18%). Beauty and cosmetics retailers have especially cost-sensitive customers in Poland (32%), Indonesia (27%) and India (26%). Consumers in the US (10%) and Great Britain (12%) are less price- conscious in this category.
While a lot of YouGov data explores how consumers will be cutting costs, they’ll also want to treat themselves occasionally. When they do decide to buy some luxury products, it’ll most likely be apparel (31%) or food (30%).
Digital disillusionment: ambivalence about an online future
The second major theme for FMCG/retail sectors in 2023 is consumers’ ambivalent attitudes to tech. Over the past couple of decades, online commerce has grown from a twinkle in Bezos’s eye to a retail supernova, but the omni-channel mix may be clarifying.. In 2023, more customers expressed a preference for shopping in a physical establishment across product categories than they did in 2022.
Consumers are most committed to in-person shopping for groceries (64%) and clothes (54%).
Online growth for health and beauty products may also be slowing down. Global interest in online pharmacies fell from 2022 to 2023, with 48% of consumers saying they prefer to buy medicine in-person. However, this does not hold in all markets. In Germany, more are willing to buy medicines online than in 2022. When it comes to health and beauty products, a third of consumers (32%) prefer to buy from a brick-and-mortar establishment, up from 31% last year.
AI has been a big story throughout the year and, again, consumers have mixed feelings. On the one hand, they believe that AI may improve things in many sectors, including personalized online shopping.
On the other hand, there are concerns. Retail workers are quickly becoming familiar with AI, as 43% say the new technology is being used or discussed in their workplace. But familiarity does not necessarily mean comfort. Many workers in the sector (35%) believe that AI will be able to perform some or most of their tasks.
It’s not just workers that have doubts. When it comes to customer service chatbots, consumers are downright skeptical. Customer service chatbots are one of the earliest and most common instances of consumer-facing AI tech, and yet 29% of consumers cannot imagine a single product type where chatbots would be useful. Only 14% believe chatbots can help them purchase clothes, and a mere 11% seem them as being useful with healthcare or beauty products. It appears that retailers may still find human customer service representatives useful.
Sustainability skepticism: brands’ bona fides in question
In every market surveyed, most customers say environmental factors are important to them. Many have even stopped knowingly making environment-harming purchases (41%). Unfortunately, “knowingly” may present a significant hurdle because even more consumers (44%) say they don’t have enough information to make an informed decision about how eco-friendly products are.
This lack of confidence in their knowledge may be linked to a widespread mistrust of brands.
More than half of consumers surveyed (55%) do not trust most brands’ sustainability claims. The tendency is especially pronounced in European countries such as France (68%) and Great Britain (64%). China and Indonesia are the most trusting regarding brand sustainability claims.
Even if brands did tell the truth about sustainability, 45% of consumers still think that prioritizing sustainability is the responsibility of manufacturers, not individual consumers.
Though skeptical of brand claims, most global consumers (69%) are confident that eco-friendly products are more expensive. Moreover, half of them (50%) say they prioritize price over sustainability at checkout. Therefore, in the face of tight household budgets, many customers are likely to cut back on eco-friendly apparel (46%) as well as healthcare (40%) and beauty products (45%).
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