More than two thirds of consumers are being put off buying sustainable goods due to the rising cost of living, according to a report by EY. Its survey of 18,000 global consumers found that nearly 80% were concerned about their finances, while more than 60% expected their living costs to rise further in the coming six months.
The research shows that these concerns are affecting the majority of all income levels. With consumer confidence shrinking, the research reveals a significantly pessimistic economic outlook from the Western markets when compared to emerging or other markets.
“2022 sees a perfect storm brewing, due to rising interest rates, lower savings, ever increasing energy costs and the return of lockdowns in China that complicate global supply chains,” said Ivan O’Brien, EY Ireland Consulting Partner.
“Irish Inflation has risen to levels not seen since the 1980s, and as prices continue to rise there is increased pressure placed upon household budgets throughout the country.” The findings show that more than one in three consumers say they are worried about having enough money to spend on things other than living expenses.
Consumers are not simply trading down on their essentials to cut costs, but instead are trying new brands and switching to private label or “owned brands”, ultimately exposing one-third of a brand’s addressable market to risk.
“Irish consumers are responding by becoming more prudent in their weekly grocery shop, holding on to clothes a little longer and reducing their spend on hospitality,” said Mr O’Brien. “Our urge to embrace sustainable products is also challenged, as inflation forces push consumers to re-prioritise how they spend. It is very likely that some new frugal lifestyle habits will stick,” he added.