Business Forum • 11 June, 2024 at 1:55 PM
Nearly half (47%) of respondents continue to be optimistic about the future according to the latest EY Future Consumer Index (FCI) – which surveyed more than 23,000 consumers across 30 countries – despite concerns about rising living costs (73%), climate change (63%) and geopolitical tensions (51%). Consumers are in fact becoming more adept at managing disruption – with 61% of respondents saying they feel in control of their lives – showing the extent to which global uncertainty, for many, has become normalized.
But while optimism grows, the rise of the independent consumer – individuals who actively seek out information, make decisions and take actions autonomously, rather than relying solely on traditional sources of influence – heralds a new challenge for consumer products (CP) companies and retailers.
Cracking the code – connecting with the independent consumer
As consumers increasingly assert their independence, the report indicates that the traditional methods of targeting, communicating and persuading them to buy are becoming obsolete. Today's consumers actively seek out new, digital channels where they can engage, provide their own advice to others, purchase and find unbiased product reviews.
Nearly three-fifths (57%) of respondents look to engage and/or contribute to online communities for advice when making a purchasing decision and, significantly, 61% say they bought a product based on an influencer's recommendation or promotion. Conversely, only 21% clicked and followed an ad on social media. Of those, consumers in Asia (44%) are more likely to engage and participate in these online communities – compared to 32% in the Americas and only 29% across Europe – as are younger generations, with Gen Z (40%) and millennials (39%) more likely to engage than Gen X (30%) and baby boomers (17%).
To effectively connect with these self-reliant customers, the report states that CP companies and retailers must adopt more persuasive tactics by investing in and utilizing channels and experiences that resonate with the values and preferences of individual consumers, rather than relying on broad, one-size-fits-all approaches.
Georgiana Iancu, Partner, Indirect Tax Practice Coordinator, and Retail and Consumer Products Sector Leader, EY Romania: "In a context where consumers value autonomy and are inundated with choice, the success of brands depends on their ability to adapt and align with individual values and expectations. A deep and personal connection between brands and consumers is no longer just an asset, but is becoming a necessity to remain relevant in the dynamic landscape of modern retail. Romanian consumers are following much of the European and global trends. However, a distinctive local feature is their cautious approach to personal finances. Despite growing optimism, there is a clear trend towards saving in Romania, even in the challenging economic climate, with two thirds of Romanian consumers saying in a recent EY survey that they are trying to save. Thus, brands that want to remain relevant in this market need to recognize and respond to Romanian consumers' need for financial security.
Thus, as far as the success of retailers and manufacturers alike is concerned, we can see from the global study, but also from the preferences expressed by Romanian consumers in the EY surveys, that their expectations are evolving, they are becoming more transactional in their purchasing decisions and will not hesitate to access any immediate benefits such as exclusive price discount offers or free services."
Trusting peers over brands
Consumers follow content creators on social platforms primarily for the quality and authenticity of the content, favoring micro-influencers and niche experts over celebrity endorsements, according to the FCI research.
Forty-nine percent of those respondents following an influencer do so because they create content that they find valuable, and 44% because they create content that they find enjoyable. Celebrity endorsements are becoming less popular, with only a quarter (25%) following an influencer because they are famous – exceptionally rising to 32% in Asia.
All things in moderation
The study finds that many consumers will be happy to see the back of third-party cookies, with those surveyed saying pre-filled shopping carts at check-out (36%), websites tracking user movement (30%) and tailored ads based on browsing/purchase history (22%) all worsen the online shopping experience. The report highlights that in this landscape, brands with nascent or non-existent direct-to-consumer channels will find it harder to make their marketing efforts effective as they do not have enough first-party data. Larger retailers are more likely to be more successful, as their websites attract more traffic, enabling them to capture enough rich data to deliver quality, personalized experiences as well as offer this data to brands.
In fact, many retailers see an opportunity here according to the report. They are investing in their own retail media networks and partnerships to collect more consumer data and build profitable, long-term partnerships with brands.
Rogers says: “Data is king for consumer products companies and brands, but they all must be transparent about how they use data and make it as easy as possible for people who do not wish to share their data to opt out. If it is too complex, consumers will leave the site rather than work out how to change their data-sharing preferences.”
Loyalty must be tailored to consumer preferences
Loyalty programs are still prevalent, helping retailers to connect with customers and collect their data, but consumer loyalty has evolved to be based more on transactional and immediate connections, and less emotional connections. The report finds that customers are driven by tangible benefits such as discounts and exclusive deals, and their loyalty is often as lasting as the benefits they receive. For example, 46% of respondents redeemed a coupon/voucher they received from a retailer, whereas only 31% downloaded a retailer/brand app, less than a quarter (23%) joined a retailer rewards club and only 22% signed up for a retailers' mailing list in the last six months. Respondents preferred loyalty features are free shipping (67%) followed by receiving lower prices in store on selected products (49%).
Despite a willingness to part with their data, consumer concerns over data security have increased over 12 months because of a higher awareness of data breaches, leaks and cyber-attacks. More than three fifths (61%) are concerned with ID theft/fraud (up from 55%), 59% are concerned about data security/breaches (up from 53%) and 54% are concerned about the company they share their data with being hacked (up from 48%).