Consumers’ Behavior is Continuing to Shift Into 2024

“How does the consumer products sector respond to the new financial realities faced by their customers? To find out, AlixPartners conducted an in-depth consumer priorities study, The Critical Consumer 2024, across the Europe, Middle East and Africa (EMEA) region.

More than 10,000 shoppers from France, Germany, Italy, Saudi Arabia, Switzerland, UAE and the U.K., were interviewed between October and November 2023, and shared their personal purchase intentions and shopping preferences heading into the new year.

In the aftermath of the pandemic, a prolonged economic crunch fueled by inflation and interest rate rises tightened household budgets throughout 2023. This sparked intense competition among brands vying for a share of the restricted discretionary spend, a trend expected to persist into 2024.

The consumer products industry, heavily reliant on the volume and frequency of discretionary spending, finds itself among the most affected sectors.

To thrive in this challenging climate, businesses must gain a profound understanding of how shifting economic dynamics and budgetary pressures influence consumer behavior.

PURCHASING HABITS

A key consideration is how purchasing habits evolve amid these uncertainties.

Consumer product companies face the imperative of aligning their offerings with consumer priorities. The focus must be on providing products that are perceived as “value-right,” delivering robust value for money, especially in categories where consumers are tightening their belts.

In the EMEA region, successful companies are those capable of offering trade-downs that resonate as genuine deals with consumers. However, maintaining product quality remains paramount to securing long-term customer loyalty within newly emerging market segments.

The European consumer landscape, characterized by pragmatic and price-sensitive shoppers, witnesses a notable trend toward discount labels.

In the U.K., a significant revelation is that over half of consumers across income brackets regularly patronize budget supermarkets and discounters.

In the U.K., a significant revelation is that over half of consumers across income brackets regularly patronize budget supermarkets and discounters. To address price concerns, businesses across sectors are advised to adopt promotional strategies and rebates, tapping into consumer expectations of finding bargains.

EMEA consumers are displaying a preference for rational spending over extravagant consumption.

CONSUMER SPENDING INTENTIONS

A detailed breakdown of consumer spending intentions reveals distinct patterns across income groups.

Low-income consumers in the EMEA region are poised to cut back on spending in 2024, with 40% planning to spend less, compared to 29% of mid-income and 24% of high-income shoppers.

Intriguingly, in the U.K., medium and high earners exhibit an increased purchase intent in the groceries category. Overall, consumers seem inclined to maintain spending levels in groceries, constituting 56% of the planned spending into 2024.

The grocery industry emerges as a standout performer across the seven retail categories surveyed, boasting the highest percentage of maintained spend. It is the only category to witness a planned uptick in purchase intent for 2024 compared to 2023.

However, a nuanced analysis focused on the five European countries reveals a net decrease in 2024 purchase intent, with 21% of consumers indicating a reduction compared to 15% planning to increase spending. This discrepancy underscores the substantial pressure on European consumer wallets.

STRATEGIES

The post-pandemic economic scenario demands strategic agility from consumer product companies. The key lies in adapting to evolving consumer preferences shaped by budgetary constraints and economic uncertainties.

Offering value-right products, understanding the appeal of discount labels, and deploying savvy promotional tactics are critical strategies for businesses seeking to navigate this challenging landscape.

The fresh produce industry, while resilient, is not immune to the broader economic pressures, emphasizing the need for nuanced approaches tailored to specific market segments and regions.

The message is clear for the consumer goods sector. Consumers’ behavior is continuing to shift into 2024 and the ability to pass inflationary increase prices without significant volume loss is over.”

*This article is excerpted from producebusiness.com website, published March 11, 2024