Consumers focusing on affordability as inflation continues to bite

Canadian consumers are focusing on affordability as inflation, high interest rates, and economic uncertainty loom large, EY’s Future Consumer Index found.

As food and rent prices continue their pocketbook-busting march upward, “affordability first” was the largest segment of global consumers (35%), followed by health first (24%), planet first (16%), society first (13%), and experience first (12%).

According to the report, consumers are “retrenching and revisiting their values to address their affordability concerns.” This is understandable when one experiences sticker shock viewing every item at the grocery store. It’s harder to buy nice organic vegetables or some greenwashed cereal when Loblaws charges $37 for a five-pack of chicken breasts.

Facing intense cost of living pressures, nearly half of Canadians (49%) say that brands are no longer important. If consumers can get a deal in this non-stop inflationary environment, they’ll take it.

In line with this, more than half would consider private labels for clothing, shoes, and accessories – up eight points from June 2022.

A further 58% say they are taking action to reduce spending in non-essential purchases. Meanwhile, a large proportion (73%) now prefer to repair rather than replace products – up six points from October 2022.

Canadian also aren’t fooled by product shrinkflation, with 80% saying they notice the pack size decreasing but not the price.

“With today’s economic uncertainties, Canadians are focusing on short-term lifestyle changes and reprioritizing individual needs,” said Monica Chadha, EY Canada retail leader.

The survey also found the high levels of trust consumers had in many companies after the pandemic are steadily falling – as inflation continues and corporations, especially in food retail and manufacturing, continue to post record profits.

Every category has seen a drop in global consumer trust from February 2021 to April 2023. Bizarrely enough, the largest share of consumers continued to have moderate to high trust in supermarkets/grocery stores, only dropping by seven points to 72%. The smallest share of consumers expressed trust in media companies, dropping four points to 45%.

The consumer trust deficit extends to sharing data with companies. EY’s consumer index has seen no significant change in the willingness of consumers to share data with companies or brands.

Global consumers remain wary, with more than half very concerned about ID theft, data breaches, and companies selling their information to third parties.