ey Data discovers that consumers are reassessing their options. This is because they carefully evaluate prices, value and pack sizes, while rethinking the role brands play in life. According to the latest EY Future Consumer Index (FCI), 88% of respondents believe that brand messaging does not resonate with needs or values, and more than a third (34%) no longer consider brands when making a purchase.
During a period of ongoing high inflation, uncertainty in trade tariffs and a difficult macroeconomic environment, consumers are worried, with over half (55%) of respondents being very interested in increasing cost of living. Price sensitivity reaches a list of purchase considerations for 81% of consumer respondents worldwide, and this survey raises consumer expectations for value, trust and relevance. Almost half (47%) of respondents worldwide are very concerned about their economy, especially millennials (50%) and Gen Z (43%).
According to FCI, which surveyed more than 20,000 consumers in 26 countries, economic pressures have forced consumers to trade as more than half (55%) of global consumer respondents report “increased cost of living” as their biggest concern. This is felt most acute in the US (61%), France (60%) and the UK (58%), with only 16% of Chinese respondents reporting the same concern.
According to the survey, over three-quarters of respondents (77%) actively change their purchase behavior in response to price increases. When facing price increases in various product categories, 41% of respondents choose cheap household and household care products worldwide, and 17% will stop buying alcohol altogether. Approximately two-fifths of the consumers surveyed (41%) buy snacks and sweets less.
Private labels have reached a tipping point
The study reveals that the increasing adoption of private label products has reshaped consumer perceptions and makes store brands an alternative to traditional brand options. 30% of respondents said they didn’t take brand into consideration at all when making their purchase decisions. Even if brands look to “brand improvements” such as ingredients and formal changes to create more value, 42% of respondents believe that these are merely cost-cutting exercises and not true innovation. Nearly nine of the 10 (88%) respondents do not believe that brand messaging matches their needs and values, and consumers prioritize discounts over brand loyalty, as 54% of respondents only purchase brand products while on sale.
FCI data shows that drivers for adopting private labels differ depending on both generations and countries. In China, Gen Z is driving a shift. An average of 37% of respondents on Gen Z in China consider private labels across categories. This is influenced by the “Dupée” culture where consumers want cheaper “replication” of more expensive items. In contrast, private label adoption is the highest among older consumer respondents in the US, particularly for food, cleaning and household items. In Europe, particularly Germany, the adoption of private labels is driven by older generations in all product categories when compared to China and the US.
Retailers appear to be tapping the shift to private labels, with 64% of respondents report seeing more private labels on the shelf, while 59% say they are looking at private label items located at the eye level. Over a third (36%) of respondents said they would continue to buy store brands and have no intention of returning to traditional branded products.
Brands are forced to prove their worth
The EY Future Consumer Index revealed that Chinese respondents are most likely to switch brands (66%) and South Africans are most loyal (38%), while Japanese respondents are most likely to be indifferent towards brands (29%). Gen Z respondents are most likely to switch brands (64%), while millennials are the most loyal (25%).
There is a reason the brand is optimistic. This is because 65% of respondents say they value themselves worldwide. In particular, 36% return to the brand for better value, as 48% of respondents are willing to return to premium branded products when offering excellent taste, quality and performance. A third (33%) are also willing to pay a premium for enhancements that improve product performance. Product categories, recognized as the most innovative beauty (43%), personal care (39%), and household care (39%), enjoy rewards for research and development (R&D) investments.
The survey revealed that there are still ways in which artificial intelligence (AI) can be considered an important shopping tool, as 58% of respondents do not make purchase decisions based on AI recommendations. Visibility is important for consumer product companies, as 50% of AI support premium brands.
