People are returning to physical stores for reasons that investment in artificial intelligence (AI) and technology alone cannot satisfy – 57% of shoppers surveyed want to see, touch and feel items before they buy them, and 68% are seeking expert advice on high-value purchases to ensure they are making the most informed choices. In a further sign that consumers are favoring physical store visits, 61% say they would go to a retailer for a store promotion that is not available online.
The report also indicates that while 68% of consumers are happy to receive and trust offers and promotions that have been personalized by AI, 49% are frustrated by smart chatbots that are not effective in resolving their queries. A further 33% are concerned that AI-generated recommendations are biased toward products/brands that may not be in their best interest.
Blending tech with the personal touch to improve customer experience
Considering these challenges, the report suggests that consumer-facing businesses must integrate personal service with complementary technology. AI has the potential to guide consumers toward fulfilling purchase choices, however, brands and retailers' success lies in striking the perfect balance – engaging customers at the right moment with a message or offer that resonates and that they trust.
The report reveals there is also a customer service gap with people's digital shopping experience, and this is something technology alone cannot solve. For instance, 26% say that getting a refund or making an exchange is a source of frustration when shopping online and 30% say poor customer service/support and difficulty connecting with a customer service assistant also ranks highly. This highlights the critical need for a more integrated approach that combines advanced technology with a strong human element to address and resolve customer frustrations effectively.
"The data from the EY Future Consumer Index indicates a return of consumers to direct interaction in physical stores, with 57% of respondents globally wanting to see and touch products before purchase, a trend that aligns with Romanian consumers' preferences for valuable offers and prudent buying decisions," explains Georgiana Iancu, Partner, coordinator of the Indirect Tax practice and leader of the Retail and Consumer Products sector, EY Romania.
"While 66% of global consumers consider private label products to be just as good as branded products, in Romania, we observe a similar behavior, driven by the need to save and pay more attention to the quality-price ratio. This concern of the Romanian consumer should represent an important benchmark for defining the strategy of players in retail and consumer goods. This alignment between local and global trends also underscores the need to balance digital innovation with personal interaction, to meet consumer requirements in a dynamic retail landscape."
Stay-at-home consumers invest in experiences
While consumers are returning to physical stores for high-value purchases, the FCI reveals that the home continues to grow in its role as the center of consumption. Since the pandemic, more consumers are moving away from convenience and digital streaming services and are less interested in following the latest trends, spending less on grocery deliveries (38%), streaming services (35%), fashion (35%), beauty (37%) and consumer electronics (41%). Instead, many are embracing a more grounded lifestyle, with 68% planning to reappraise how they spend their time on things they value the most – for example, (31%) are planning to entertain and nearly half (47%) are planning to cook more at home, compared to 29% and 39% respectively this time last year.
This preference for at-home experiences over convenience services is a response to the sustained inflationary pressures that have continued to challenge household budgets. The research shows that 85% of consumers are concerned about their finances and 72% will be focused on value for money in the future, particularly regarding the affordability of groceries and other essentials.
This trend is not limited to the older demographics (Gen X and baby boomers) – 38% of whom plan to spend more time at home. Over two-fifths (43%) of younger generations (Gen Z and millennials), often perceived as the most social, are also embracing this shift toward more intimate and personal home-based activities. According to the FCI, over half (54%) of younger consumers plan to cook more at home while 37% plan to entertain more.
Private label popularity on the rise
The cost-of-living crisis and inflationary pressures have also had an impact on consumers' preference for private label over branded goods. While initially nearly a third of consumers (28%) admitted to buying private label over branded goods in response to rising costs, the survey highlights that this trend has become a sustained habit, with 66% finding these less expensive alternatives satisfying needs just as well as their branded alternatives, with 38% having no plans to switch back to branded goods.
Significantly, the research also reveals that this trend is not exclusive to mid- to lower-income bands. Higher income consumers are planning to buy private label brands in the future and are considering this across every category, including fresh food (60%); home and household care (56%); packaged food (52%); clothing, shoes and accessories (49%); personal care (49%); and beauty and cosmetics (39%).
According to the FCI, retailers are trying hard to capitalize on the opportunity by promoting private label aggressively – with eye-level shelving and front-of-store placements – and increasing the range of products they offer. Instead of just emulating branded products at a lesser price, they are offering a range of product options and analyzing their point-of-sale data to identify early trends, meaning they are in a strong position to respond to buying patterns and consumer needs. The closer retailers get to the consumer, the more power they have to curate buying choices and the more they can drive lasting loyalty.
