Canadians changing their spending habits
More than half of consumers are being impacted by rising costs of goods and services: survey
Canadians are changing their spending habits in response to inflation, a recent report by Ernst & Young Global Ltd. found.
The EY Future Consumer Index survey revealed that over half (53 per cent) of consumers are being impacted by the rising costs of goods and services.
And it’s not just lower-income earners. Although they are the most affected (81 per cent), middle (50 per cent) and high-income (35 per cent) earners are also feeling the pinch.
“The fabric of daily life has shifted in many ways — from where people travel and seek entertainment, to how they work and meet their needs,” Lokesh Chaudhry, EY Canada consumer co-leader, said in a press release.
“These significant shifts, coupled with inflation, are driving consumers at all income levels to change their shopping behaviours and rethink purchase decisions.” The survey found that Canadians are continuing to rein in their consumption by opting for low-cost substitutes and buying fewer non-essentials.
Some of the areas where consumers are cutting spending include clothing (40 per cent), beauty and cosmetics (37 per cent), and big-ticket items (34 per cent). Many are also scouting private-label replacements for fresh (58 per cent) and packaged (63 per cent) food.
The results showed that Canadians are prioritizing experiences over goods after two years of the COVID-19 pandemic.
“The modest post-pandemic lifestyle that many consumers plan to live is one that puts a higher value on experiences, with over a quarter of Canadians pivoting to spend more on this category rather than physical goods,” said Ryan Beck, EY Canada consumer co-leader, in the press release.
Consumers are also changing their preferences on how they choose to enjoy various experiences. A majority of customers (66 per cent) said they prefer at-home instead of in-store experiences.
“In line with the growing desire for simplicity and flexibility, the most appealing experiences will be those that are easy to access and take minimal time investment — that means more digital touchpoints, frictionless brand experiences and personalized consultations in the metaverse,” said Chaudhry.
Those who do prefer shopping in person are demanding more from physical stores. A quarter of respondents said they are only planning to go to stores that offer great experiences.
“People are beginning to focus on the parts of their life where they feel they have more control, including how they use their time and money and how they can improve their health and mental well-being,” said Beck.
Canadian retailers may have to find innovative ways to reach their audiences, such as investing in emerging digital technologies.
“To be relevant in the future and drive customer loyalty, companies need to better understand the growing range of consumer needs, eliminate pain points and quickly respond with the right offering at the right price,” said Chaudhry.
The report said companies should design their businesses around how people live instead of what consumers buy and compete for shoppers wherever they are.