Blistering cost of living crisis brings back 1970s and 1980s shopper behaviours: Consumers experiencing diminished living standards

Blistering cost of living crisis brings back 1970s and 1980s shopper behaviours: Consumers experiencing diminished living standards

PR Newswire

BRACKNELL, England, Oct. 24, 2022

BRACKNELL, England, Oct. 24, 2022 /PRNewswire/ -- The latest biannual 'FMCG Demand Signals' report from IRI, the leading provider of big data and predictive analytics for FMCG brands and retailers,  has launched today, revealing significant changes in the way consumers are coping with a cost of living crisis unlike any they have experienced before. With inflation pressures intensifying throughout 2022 on volatile energy prices and supply-side shortages pushing up input costs even further, consumers disposable income, confidence and spending has now reached crisis levels across key European markets.

Forensically unpacking the impact of the pandemic, inflation and the cost of living crisis on over 230 FMCG categories, 2000+ product segments and over a 100 million SKUs across the US and several of the largest markets in Europe (France, Italy, Germany, Spain, UK and Netherlands) and Asia Pacific, the report, which covers data from in-store purchases and a survey in 12 global markets, flags that deteriorating disposable income is plaguing middle- and low-income consumers across the developed world.

Growth in FMCG category sales has softened to 1.5% in 2022 adding €9bn in value sales vs. year ago – down from 3% in the previous year. The latest figures covering the year-to-date are promising at 2.6% driven in large part by inflationary price increases rather than growing demand.  The contribution in growth from pent-up demand as restrictions eased, resurgent mobility from consumers returning to the office and taking holidays has faded. In fact, consumers are having to dip into personal savings to survive.

Categories fueling 2022 growth have been identified as Chilled & Fresh, Ambient, Beverages & Personal Care products, however this has been partially offset by declines in alcohol sales (5% drop) and household care (0.2% drop) products.

"The ongoing slump in unit sales in response to inflation is an early indication of softness in FMCG demand," commented Ananda Roy, Global SVP, Strategic Growth Insights, IRI. "Unable to deliver every day lower pricing deals – and even maintain prices – because they're experiencing higher input costs themselves, means brands and retailers need to look again at how they can support consumers throughout this very difficult period. We're witnessing the biggest movement in consumer behaviour in over five decades, with shoppers questioning 'Do I really need it?', 'Can we still afford to make a sustainable or altruistic choice?' and now 'Use less, waste less'."

Key European highlights:

Roy continued: "It's evident that consumers' willingness to spend is suffering and the direction of travel is likely to worsen – with the likelihood of further sharp price rises given high input costs and volatile energy prices - but it's positive to see that consumers are getting better informed and taking control, and adapting to cope better with a significantly constrained standard of living. Brand manufacturers and retailers who have fueled the consumers' expectations to receive the highest quality and innovation, all year round and out of season, at the lowest possible price be it food, cosmetics, apparel or household products; are now unable to deliver. The tide has truly turned and a whole generation of consumers are experiencing a declining standard of living (not just a cost-of-living).

"Gone are the days of the one-stop weekly shop, we're expecting to see an increase in shopping around for must-have products and the consumption of less expensive seasonal goods. There are several difficult decisions for shoppers on the cards, and retailers and brands will do well to take a long and hard look at how they're going to respond to shopper needs."  

IRI Contact: 
Ananda Roy
Email:   Ananda.roy@iriworldwide.com

Media Contact:
Nikki Alvey
Email:   nikki@eurekacomms.co.uk
Phone: +44 (0)1420 564346

About FMCG Demand Signals

IRI's 'FMCG Demand Signals' report describes value trends across food and non-food categories, across channels, pricing and promotions, and identifies key growing and declining categories. The focus on manufacturer and retail trends, spotlights on distribution, pricing, innovations, and item-level demand complete the picture.

IRI's data scientists study billions of transactions across the USA and several of the largest European and Asia-Pacific markets to provide clarity on what drives commercial value.

'Demand Signals' is a biannual report powered by Liquid Data® and Unify®, a proprietary technology platform that clients use to interrogate key performance measures as they happen.

IRI's next Demand Signals report will appear in February 2023 and will cover a summary of the full 2022 year, and the second half of 2022, detailing the effects of the inflationary impact on household consumption and discretionary purchases.

The consumer behaviour insights originate from IRI's 'Crisis At Every Step' Inflation Survey; which was conducted across 3,000 shoppers from the USA, Australia, New Zealand, Brazil, Turkey, UAE and in Europe (UK, France, Spain, Germany, Italy and The Netherlands.

About IRI

IRI is a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC health care organizations, retailers, financial services and media companies grow their businesses. A confluence of major external events — a change in consumer buying habits, big data coming into its own, advanced analytics and personalized consumer activation — is leading to a seismic shift in drivers of success in all industries. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand, cloud-based technology platform, IRI is empowering the personalization revolution, helping to guide its more than 5,000 clients around the world in their quests to remain relentlessly relevant, capture market share, connect with consumers, collaborate with key constituents, and deliver market-leading growth. For more information, visit www.iriworldwide.com   

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