The second edition of Capgemini Research Institute’s annual consumer trends report, What Matters to Today’s Consumer, reveals the the impact of an increased cost of living on consumer spending habits and preferences.
Almost half (44%) of respondents said they are reducing their overall spending to navigate cost pressures, up from 33% in November of 2020, data showed.
A survey of 11,300 consumers in 11 countries showed that nearly three-quarters (73%) of consumers are making fewer impulse purchases, while 69% are cutting back on non-essential expenses, such as electronics, toys, and dining out, as well as delaying the purchase of luxury items.
Lindsey Mazza, global retail lead at Capgemini Group, said, "There’s an opportunity for retail businesses to dramatically reimagine their operational strategy in order to weather this storm and pass on price benefits to consumers. By identifying new revenue streams, creating new markets, transforming operations, and optimising costs, businesses can succeed without compromising on sustainability or overall customer experience.
"Harnessing technology for intelligent demand planning, inventory management and automated operations can not only help reduce costs and maintain margins, but also yield sustainability benefits for organisations."
While sustainability continues to be an important factor in making a purchasing decision, only 41% of consumers globally said they were willing to pay more for a product they believe to be sustainable.
It marks a decrease as compared to the findings in 2020, when 57% of consumers said that they paid higher-than-average prices for products that they perceive as sustainable.
Brands and retailers need to re-evaluate their pricing strategies to offer sustainable products that are affordable and introduce loyalty programmes to help customers navigate the cost-of-living crisis, according to the report.
Other findings include the possibility for brands to unlock new revenue streams and growth opportunities by leveraging the potential of social media influencers and expanding into newer channels to reach customers.
Studies have shown that 70% of consumers buying products on social media trust influencers. Almost half (48%) of Gen Z customers discover new products through online influencers and 32% go on to purchase them.