An Ernst & Young report has identified changes in consumer spending behavior due to increased inflation, elevated interest rates, and a rise in credit card delinquencies, which are diminishing consumers' buying power
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GLOAccording to a study conducted by Ernst & Young, almost 75% of consumers are postponing their holiday purchases to take advantage of discount shopping events like Black Friday or Singles Day, and over half intend to reduce their spending in order to save money. The report highlights how changes in consumer spending behavior are occurring due to factors such as higher inflation, increased interest rates, and a rise in credit card delinquencies, which are eroding their purchasing power. Jim Doucette, the consumer products and retail leader at EY-Parthenon, emphasized this shift in an interview.
The survey involved more than 22,000 consumers across 28 countries, including the US, China, India, Brazil, Japan, and Germany. Among those surveyed, 80% expressed concerns about their financial situation. To make their budgets go further, more consumers are planning to prepare and entertain at home this year, while cutting down on restaurant takeout.
Kristina Rogers, EY’s global consumer leader, noted that consumers are continuously reevaluating what they consider essential and are increasingly avoiding non-essential impulse purchases.
The study, conducted in September and early October, reveals that 50% of consumers plan to primarily or exclusively shop online this season. This marks a 16% increase compared to the previous year but remains below the 61% who favored e-commerce in 2020. Only 10% intend to conduct their holiday shopping exclusively in physical stores this year, which is 14% lower than last year and just slightly higher than the figure from 2020, a period when the pandemic still restricted consumer mobility.
According to EY’s survey, 39% of consumers in the United States and 35% in Europe have intentions to reduce their holiday spending. In China, only 11% state they will spend less this year, while 45% plan to increase their holiday spending.
Source: E&Y
