While revealing consumer insights Capgemini Research Institute’s annual consumer trends survey highlights areas that retailers need to work on to stay relevant to the consumer
Mumbai: Businesses will need to find ways to cut costs and offer lower prices to consumers, found a global consumer sentiment report by Capgemini Research Institute. According to the report titled ‘What Matters to Today’s Consumer’, 67% of consumers say that brands and retailers should offer lower prices for the products their families require.
The report highlights that retailers and consumer products companies will need to transform their operational strategy to achieve cost reductions in a way that also delivers on the sustainability and convenience expectations of consumers. Transforming the way organizations use labour, adopting a tech-led supply chain and automating warehouse operations can also go a long way in improving last-mile delivery while also bringing down costs, added the report.
Cost seems to be a major consideration for consumers as the survey revealed that most consumers (61%) are concerned about their financial situation and 69% are cutting back on non-essential expenses. Among the consumers that are concerned about their financial situations, millennials (66%) and Gen X (64%) were the most worried, while boomers (55%) the least. To navigate these pressures, almost half (44%) of consumers said they were reducing their overall spending; an increase from 33% of respondents who said the same in November 2020.
This is reflected in their purchasing behaviours, which are changing. From its survey of 11,300 consumers in 11 countries, the report found that nearly three-quarters (73%) of consumers are making fewer impulse purchases, while 69% are cutting back on non-essential expenses such as electronics, toys, and dining out, as well as delaying the purchase of luxury items. Saving money is top of mind for many people, with 64% of consumers buying products from hypermarkets and discount stores and 65% buying cheaper private-label or low-cost brands.
“There’s an opportunity for retail businesses to dramatically reimagine their operational strategy to weather this storm and pass on price benefits to consumers. By identifying new revenue streams, creating new markets, transforming operations, and optimizing costs, businesses can succeed without compromising on sustainability or overall customer experience,” said Lindsey Mazza, Global Retail Lead, Capgemini Group. “Harnessing technology for intelligent demand planning, inventory management and automated operations can not only help reduce costs and maintain margins but also yield sustainability benefits for organizations.”
No premium for sustainable products
Sustainability continues to be an important factor when deciding which retailer or brands to shop with, revealed the survey. Yet, only 41% of consumers globally said that they were willing to pay more for a product they believe to be sustainable. This is a marked decrease as compared to the report findings in 2020 when 57% of consumers said that they paid higher-than-average prices for products that they perceived as sustainable. The report highlights that brands and retailers must re-evaluate their pricing strategies to provide affordable yet sustainable options to consumers and offer loyalty programs that help customers navigate the current crisis while building customer loyalty in the long term.
Personalisation through social media
The report also suggests that by leveraging the power of social media influencers and expanding into newer channels to reach customers, brands can unlock new revenue streams and growth opportunities. According to the research, 70% of consumers buying products on social media said they trust influencers when they use the product and share their own experiences and reviews. For example, Gen Z shows the highest engagement here, with almost half (48%) discovering new products through online influencers and 32% going on to purchase.
The Capgemini Research Institute surveyed consumers over the age of 18 across 11 countries: Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the UK, and the US. To qualify for inclusion in the survey that took place in October and November 2022, consumers had to have purchased groceries and/or health and beauty products in the preceding six months. This is the second edition of Capgemini Research Institute’s annual consumer trends report, which reveals the impact of an increased cost of living on consumer spending habits and preferences.
The Capgemini Research Institute is the in-house think-tank of global firm Capgemini on all things digital. The Institute publishes research on the impact of digital technologies on large traditional businesses. The team draws on the worldwide network of Capgemini experts and works closely with academic and technology partners. The Institute has dedicated research centres in India, Singapore, the United Kingdom and the United States.