27 May 2020 | 02.42 pm
Covid Spurs Change In Consumer Spending
EY Future Consumer Index charts changes
27 May 2020 | 02.42 pm
One-quarter of consumers have cut spending as a result of the Covid-19 pandemic, while 42% think that the way they shop from now on will fundamentally change, according to research published by EY.
EY’s Future Consumer Index brackets consumer spending reactions to the Covid-19 pandemic into four segments. The ‘cut deep’ segment comprises the 27% of consumers that are spending less, while the ‘stay calm, carry on’ segment represents the 26% of consumers who are continuing to spend as normal.
EY also found that more than one-third of consumers fall into its ‘save and stockpile’ segment, which EY interprets as pessimism about the future. Meanwhile, 11% of consumers are described by EY as the ‘hibernate and spend’ segment, and are spending more across the board.
Asked about brands and products, one-third of consumers told EY that they would pay more for local products. One in four consumers would pay more for trusted brands, while around one-quarter would pay more for ethical products.
EY provided further analysis of its four consumer segments, noting that the ‘cut deep’ cohort are mainly aged 45 years old and over. Close to one-quarter of this grouping have seen their jobs suspended either temporarily or permanently.
Three-quarters of the ‘cut deep’ segment are shopping less frequently, while two-thirds are only buying essentials.
In the ‘stay calm, carry on’ grouping, EY said that only one in five are spending more on groceries, while around the same proportion are spending less.
EY’s ‘save and stockpile’ segment indicates that one-third are spending more on groceries, while most are spending less on clothing and leisure.
In the ‘hibernate and spend’ segment, which EY explained primarily comprises those aged between 18 and 44, four in ten are shopping less frequently.
Yvonne Kiely (pictured), head of EY-Seren Ireland, said that the survey showed a tale of two groups of Irish consumers. “[They are] those that can’t or won’t spend as they wait to see how this pandemic unfolds … and those that are using any available outlet to spend.”
Kiely added that EY expected a long-term shift of perspective among people aged 45 years or older. “These consumers have had maybe eight years of income improvement since the last recession, but they remember the experience of having no access to funds and being really challenged to cover the basics like paying the bills and putting food on the table.
“With that in mind, it’s understandable that this group are being ultra-cautious in their spending and will continue to be so for years to come.”
Kiely suggested that five new consumer segments may emerge as the country moves beyond the pandemic. Among the new consumer groupings predicted by EY are the ‘remain frugal’ segment, the ‘cautiously extravagant’ and the ‘get to normal’ cohorts.