From dealing with inflation to meeting changing expectations, Irish consumers continue to evolve. How can companies meet them where they want to be?
As 2023 unfolds, powerful internal and external forces weigh on Irish consumers and companies. These forces produce friction that can block the gears of commerce and stand in the way of more satisfying customer experiences.
Concerned about inflation and the cloudy macroeconomic climate, consumers are realigning their shopping habits and adopting cost-cutting behaviours. Nearly half of all Irish consumers are very or extremely concerned about their financial situation. And 98% of surveyed consumers intend to adopt some type of cost-saving behaviour over the next six months.
Source: PwC’s February 2023 Global Consumer Insights Pulse Survey
Still, eager to resume their pre-pandemic habits, they are returning to stores and travelling again. Empowered by technology, they both seek and demand seamless in-store and online experiences that better suit their lifestyles and pockets.
of Irish consumers have changed non-essential spending.
rate knowledgeable and helpful sales associates as important.
plan to increase their level of in-store shopping.
of consumers have heard about, but not used, the Metaverse.
In 2022, a source of friction rarely seen in our prior surveys entered the field: inflation. While inflation in many markets is coming off the boil, it remains a powerful factor. In PwC's 26th Annual Global CEO Survey, 38% of Irish CEOs listed inflation as a key threat over the next 12 months. It is expected to dampen consumers’ spirits because prices have risen more rapidly than incomes in many parts of the world.
Almost half (45%) of Irish consumers are extremely or very concerned about their financial situation, with one-fifth (19%) extremely concerned. Over 75% say they have changed their non-essential spending, with 15% halting non-essential purchases altogether.
When it comes to baseline concerns about the economy, personal financial situations and non-essential spending plans, four distinct groups emerge. More than half (a combined 58% of global consumers) are either not at all concerned or somewhat concerned that an economic crisis exists, but have not reduced non-essential spending. The remaining 42%, who identify as most concerned, have taken action to reduce non-essential spending. Looking across demographics, those aged 75 and older were among the least concerned, while Gen X (42-57) comprises the most concerned cohort.
Looking ahead, however, a different story emerges. 98% of Irish consumers surveyed intend to adopt cost-saving behaviours over the next six months. The pessimists, the most concerned group (42%), expect to significantly decrease their spending across all retail categories. They are less likely to travel, for instance, and more likely to switch to a cheaper brand of a particular product or even go without a regularly used one. In groceries, the area Irish consumers are least likely to cut back on, 31% say they plan to decrease spending, compared with 13% in the prior survey.
There are some exceptions, however. Consumers have displayed a willingness to put their money where their values are. In the survey, more than 75% of Irish consumers say that “to some or to a great extent”, they are willing to pay more for food produced by local farmers and for goods made by a company known for ethical practices, such as supporting human rights or avoiding animal testing.
Considering the current economic climate and potential cost-of-living impact, how concerned are you about your personal financial situation?
Question 2: Considering the current economic climate, which of the following statements best describes your situation regarding non-essential spending?
Select a generation to explore varying levels of concern about the economy.
|Answers||All generations||Generation Z||Millennials||Generation X||Baby Boomers||Greatest Generation|
|Not concerned and haven’t changed behaviour on non-essential spending||10%||8%||10%||8%||14%||25%|
|Concerned but haven’t changed behaviour on non-essential spending||20%||22%||21%||17%||16%||17%|
|Concerned to some extent and have taken action on non-essential spending||28%||31%||26%||28%||33%||34%|
|Most concerned and have taken action on non-essential spending||42%||40%||43%||47%||37%||25%|
Diving deeper into Irish consumers’ shopping and behaviour trends, some shifts were evident from the prior survey conducted early in 2022. When asked about their shopping frequency (daily, weekly) over the last 12 months across different channels, shopping in-store remains the most popular, with a slight increase to 47% (43% Pulse 4). Use of mobile/smartphones was next (21%), followed by PCs (13%), though preference for both those channels dipped, by 5% (mobile) and by 4% (PC), over the past six months. Across those three channels, consumers who are not concerned and haven’t changed their spending behaviour on non-essential products (excluding groceries) are significantly more likely to shop weekly on these platforms.
In a nutshell, many trends that got supercharged in the depths of the COVID-19 crisis have unwound. The proportion of those who say they engaged with various e-commerce channels declined, but the data shows that the long-term growth trends remain intact.
Within digital shopping, as is the case in other areas of digital experience (see the PwC Entertainment & Media Outlook), mobile activities are gaining share at the expense of desktops and tablets. When asked how their spending and shopping behaviour might change in the next six months, 27% of Irish consumers said they plan to increase online shopping, down from 42% in our last survey. At the same time, plans to increase shopping in physical stores dropped significantly, to 23% from 45%.
What people expect and experience in these physical and digital environments is changing. It is incumbent on market participants to meet consumers in both physical and digital spaces, and to meet their changing expectations. And, as is evident throughout the survey, it is not an either/or proposition. Consumers are increasingly saying that they want the physical shopping experience to be enhanced, abetted or mediated by digital technologies: call it ‘phygital’.
Asked to rank what factors would most enhance their in-store shopping experiences, 34% of Irish consumers put access to knowledgeable and helpful sales associates on top, with over half of Baby Boomers ranking that as the leading factor. At the same time, 25% (versus 16% globally) said the ability to use self-service tills was their most-favoured attribute. The next three attributes that lag in importance to the Irish consumer include the ability to use scan-and-go devices (11%), in-store use of a retailer’s website or mobile app to browse for particular products (10%) and the availability of click-and-collect services (10%).
The goal of frictionless retailing is to remove the barriers consumers face in stores, whether standing in a check-out queue or paying without swiping a card. In PwC’s recent US Customer Loyalty Survey, 82% of respondents say they would be willing to share personal data in exchange for a better customer experience. Conveniently for retailers, these technologies are seen as a way to remove labour costs. But consumers also have high and growing expectations for assistance and convenience that would seem to introduce more friction. That dichotomy presents a mix of opportunities and challenges for retailers, which is explored in a recent PwC UK report on the future of frictionless retail. Computer-vision artificial intelligence (AI) technologies — which enable consumers to enter a store, pick up their products and simply walk out without the need to scan, queue or check out — are slowly rolling out across retail markets. Our research shows that both consumers and retailers can benefit from these digital developments.
But that doesn’t mean retailers can reflexively reduce their workforces. Indeed, the reality in Ireland at present is that attracting talent remains a significant challenge for retailers. Long-term, retailers will likely have the same number of employees but will need to train new hires and reskill or upskill existing ones. Also, because data collection and analysis inherently increases with these systems, tech developers and retailers must be able to manage the concerns of both consumers and regulators about the privacy, security and dissemination of personal data.
E-commerce and the digital technologies that enable them are designed to remove friction. But they create their own frictions, many of which have been exacerbated or aggravated during the disruptions of the past two years. Since the onset of the pandemic, e-commerce consumers have experienced long wait times, bungled deliveries, higher delivery costs and stock shortages. In our survey, 54% of Irish consumers who opt to shop in physical stores, or to place orders online and collect in-store, say they do so because it allows them to check that products are not broken or faulty and that they are the products they ordered. Another reason, cited by 51% of Irish consumers (versus 41% globally) for shopping in physical stores is simply because they missed doing so during the pandemic lockdowns.
These trends in consumer preferences point to a hybrid strategy that producers and retailers are grappling with. Consumers aren’t approaching where to shop, for whatever is on their list, as an either-or proposition but as a this-and-that set of options. This duality was apparent well before the pandemic. Despite persistent economic and social headwinds, albeit some of these now easing, consumers are not simply switching from online to in-store shopping. Instead, they choose one or the other – or both – based on the preferred attributes of each, such as in-store technology or improving delivery times and cost for online orders. These trends are likely to continue in 2023.
When asked to name the most frequently experienced issue when shopping in physical stores over the last three months, 74% of Irish consumers cited the rising prices of household goods, significantly higher than their global counterparts at 56%. This was followed by stock availability (32%) and busier stores/ longer queues (28%).
Disruptions in supply chains are among the factors driving inflation, along with higher energy and commodity prices. Although Irish consumers might not specifically say that supply chain disruption is to blame for their shopping woes, the unpredictable flow of goods is seen and keenly felt. Nearly eight in ten (78%) respondents say that rising prices have the greatest impact on their in-store shopping experiences, followed by products being out of stock (50%) and reduced product ranges (36%).
In an indication of the friction that can build up in online environments, supply chain issues also continue to plague online shoppers. When asked to identify issues they experienced “almost always or frequently” while shopping online in the last three months, 63% (globally 48%) cited the rising price of household goods. Nearly one-third (30%) cited the inability to buy a product because it was out of stock. And when asked which issues had caused the greatest impact, those same three were named, with rising prices again dominating (64%). Over half (53%) of Irish consumers purchase retailer ‘own brand’ products in response to these issues (significantly above their global counterparts at 32%).
There are continuing signs that supply chain disruptions impact day-to-day shopping behaviour, including which channels consumers choose to make purchases. 43% of Irish consumers surveyed remain most likely to shop at multiple retailers – whether in-store or online – no change from our earlier survey. And more than one-third (33%) visit multiple websites to check for product availability.
Almost half (42%) of global consumers said they are most concerned and have taken action on their non-essential in-store and online spending in response to supply chain issues. Interestingly, 13% of Irish online buyers say they switched to in-store shopping. Other actions taken due to supply chain woes include changing product brands, spending more on alternative products, waiting for an out-of-stock product to be available again, and going without a regularly purchased item.
Question: Thinking about what your employer requires at this time, which of the following statements best reflects a typical working week for you?
Select a territory to see how working-from-home options differ according to location.
I am able to choose how and where to work.
I am required to work in a hybrid way.
|Working status||Global||Australia||Brazil||Canada||China||Egypt||France||Germany||Hong Kong||Indonesia||Japan||South Korea||Malaysia||Mexico||Philippines||Saudi Arabia||Singapore||South Africa||Spain||Thailand||UAE||USA||Vietnam||Ireland||India||Qatar||Western Europe||Asia Pacific||Africa and Middle East||Americas||SEAC|
|Hybrid: Required to work in a hybrid way||26%||25%||28%||21%||34%||32%||23%||24%||26%||30%||16%||15%||20%||31%||27%||32%||35%||25%||27%||32%||29%||16%||40%||22%||29%||32%||24%||27%||29%||24%||31%|
|Hybrid: Able to choose how and where to work||10%||11%||10%||12%||9%||13%||7%||10%||5%||8%||14%||6%||11%||10%||11%||7%||6%||15%||7%||21%||5%||10%||8%||11%||10%||6%||9%||10%||10%||11%||11%|
Digital environments continue to evolve, whether it is the continuing roll-out of 5G or the integration of shopping into social media apps. A great deal of attention is being paid to what may be the next large-scale digital platform: the Metaverse. The Metaverse, which promises to erase the frictions between the digital and the physical worlds, is still very much in its infancy and challenged by its own set of frictions. Consumers will have to wait for the necessary technologies to come to full fruition, which will take years. As the PwC report, Demystifying the Metaverse, concluded: “The metaverse is an evolution, not a revolution. And it’s one that business leaders should not ignore”.
The countries with the highest percentage of metaverse users have young populations and growing middle classes.
Our survey finds that different components of the Metaverse are currently available and being explored by consumers. 60% have heard of the Metaverse, but have never used it. A small number say they have participated in Metaverse-related activities in the last six months for entertainment, virtual experiences or purchasing products. For example, 4% have used a virtual reality (VR) headset to play games, watch a movie or for work-related activities. The same number (4%) said they have experienced a virtual retail environment or a concert and purchased a non-fungible token (NFT).
Use of the Metaverse varies widely by age and across different countries. Not surprisingly, the younger the person, the more likely they are to engage with the Metaverse. Demographically, Young Millennials (36%) and Gen Z (31%) are the top Metaverse users, while only 8% of Boomers and 6% of the ‘Greatest Generation’ have. One of the really interesting dichotomies can be seen in the variation of use by country. Frequently, the Metaverse is identified with the use of costly VR headsets and other equipment. That would suggest that adoption would be high in wealthy countries and much lower in lower-income countries. But that is explicitly not what the survey has found. Indeed, the countries with the highest proportion of respondents who said they had used the Metaverse in the past six months were India (48%) and Vietnam (43%) – countries with young populations and growing middle classes. By contrast, 90% of those in Japan and 88% in Canada identified as non-users of the Metaverse (96% in Ireland). What accounts for this dynamic? It could have something to do with age, but it speaks to the widespread availability of cheap and accessible digital experiences around the world.
Whether they are using the Metaverse or not, Irish consumers already inhabit a massively digital universe. The billions of daily transactions, interactions and downloads both enable and compel the pervasive sharing, collection, analysis and dissemination of consumer data by companies, organisations and governments worldwide. Control over all that data has become a source of friction for consumers. Unsurprisingly, PwC's Global Digital Trust Insight Survey 2023 found that over 75% of Irish organisations plan to increase their cybersecurity budget for 2023.
Asked about their level of concern around personal data privacy when interacting in routine activities and with various entities, nearly half (47%) say they are extremely or very concerned when engaging with social media. Concern among Irish consumers is also high regarding the media in general (35%), third-party travel websites (29%) and healthcare companies (27%).
There is less, but still substantial, concern when engaging with consumer companies (24%) and retailers (23%). It is possible that retail performs comparatively well here because the return for consumers on providing data is clearer and more transparent in the form of vouchers, discounts, and special offers.
Question: To what extent, if at all, are you concerned about the privacy of your personal data when interacting with the following types of companies? (Respondents answering ‘extremely concerned’ or ‘very concerned.’)
Select a channel to see to what extent each generation and region have privacy concerns.
|Category||Social media||Media||Third-party/portal travel websites||Healthcare||Travel operator websites||Consumer companies||Retail companies|
|Africa and Middle East||51%||47%||39%||36%||34%||35%||34%|
As we look ahead, three areas of friction need to be managed to drive an exceptional customer experience.
This includes macro levels of inflation, a global recession or contraction, wars and disruptions to trade caused by the pandemic. In response, consumer-facing companies must focus on resilience, conduct scenario planning and ensure that their supply chains, operating models and staffing levels are fit for a range of potential short-term outcomes.
This includes insufficient staffing in stores and failing to meet or manage expectations surrounding the experience. In response, companies have to focus on operational excellence and continue to experiment and innovate by using technology in stores and creating satisfying ‘phygital’ experiences.
This includes changes in behaviour due to economic or personal circumstances. In response, companies must monitor and stay on top of the latest trends while plotting investments and initiatives to meet customers wherever they are and build loyalty.
The term ‘frictionless retail’ may be a worthy goal. But a deep understanding of what consumers think, the stresses that concern them and their demands and expectations should lead to a more sophisticated and strategic understanding of the frictions that exist – and the steps needed to mitigate or remove them.
Our pulse survey offers insights into the complexity of changing Irish consumer expectations and increasing demands. There is a broad range of issues to address and careful consideration is required to ensure that decisions are made in line with long-term strategy. Our team of industry and subject matter experts are available to discuss any questions you may have. Contact us today.
The Global Consumer Insights Survey is a biannual study that seeks to keep a closer watch on changing consumer trends. For our February 2023 pulse survey, we polled 9,180 consumers across 25 territories: Australia, Brazil, Canada, China, Egypt, France, Germany, Hong Kong SAR, India, Indonesia, Ireland, Japan, Malaysia, Mexico, Philippines, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Thailand, United Arab Emirates, United States and Vietnam. The respondents were at least 18 years old and were required to have shopped online at least once in the previous year.