PwC Survey: Majority of Global Consumers Cutting Non-Essential Spending

As the cost of living crisis continues to rise globally, consumers have drastically adjusted their spending behaviors, with the majority (53%) of global consumers “holding back” on non-essential spending. According to the 2023 PwC Global Consumer Insights Pulse Survey, which captured the views of 9,180 consumers across 25 territories, 15% have stopped non-essential spending altogether.

The survey also found the majority of consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline since the previous pulse survey in June 2022. Industries including luxury and premium products, travel, and fashion expect to see the greatest portion of consumer spend reductions over the next six months, whereas groceries is expected to decline the least.

Consumers globally are shifting their consumption habits in-store and online as the cost of living surges and supply chain disruptions impact product availability and delivery times, according to the study. As a result, almost half (49%) say they are buying certain products when on offer/promotion, 46% are looking to retailers offering better value, 40% are using comparison sites to find cheaper alternatives, 34% are buying in bulk to save cost, and 32% are buying retailers ‘own brands’ to find savings. Demographically, Generation X is the “most-concerned” (47%) and has taken action on non-essential spend, Baby Boomers lead concerns to “some extent” (33%) while taking action, whereas Millennials lead the way when “concerned,” but not changing behavior.

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While more than half of consumers (56%) said rising prices remain the most frequently experienced issue when shopping in-store, supply chain issues also dominate, seeing larger queues and busier store locations (30%) as well as product availability (26%) impact consumer behavior. Supply chain disruptions for in-store shopping appear most prevalent for consumers in Australia (36%), the United States (35%) and India (34%). For online shoppers, rising prices (48%), product availability (24%), and longer than expected delivery times (24%) lead reported concerns.

Consumers are planning to reduce their spending across all surveyed retail categories over the next six-months, with the greatest decrease forecast in luxury/premium products or designer products (53%), travel (43%), virtual online activities (42%), and fashion — such as clothing and footwear (41%). However, there still remains an appetite for future spend, with 40% indicating they will look to treat oneself/others, whereas 39% view them as better quality. Groceries (24%) had the least reported planned spend reduction.

“The cost of living crisis is having a material impact on how consumers purchase, both in-store and online,” Sabine Durand-Hayes, global consumer markets leader at PwC France, said in a statement. “As prices rise, consumers globally are cutting back on non-essential spend, while spending more time looking for cheaper alternatives. While every industry surveyed shows an anticipated decline in spend over the next six months, we are nevertheless seeing consumers continue to prioritize products that are ethically produced and sustainable. If retailers are to thrive in this challenging macroeconomic environment and maintain consumer engagement, they must leverage and diversify their distribution channels, offer competitive pricing, invest in greater supply chain resilience, and compensate for customers’ increasing reluctance to share data online by better monitoring their customer base and loyalty programs.”

Despite a planned spend reduction and a challenging economic environment, consumers say they are still willing to pay more for sustainable product types. Overwhelmingly, more than three-fourths (78%) are willing to pay higher for a product that is produced/sourced locally, or made from recycled, sustainable or eco-friendly materials (77%), or produced by a company with a reputation for ethical practices (75%). 

In the previous pulse released June 2022, consumers’ frequency of daily/weekly shopping — which had been on an upward trajectory during the pandemic — looked to be shifting back to pre-COVID times. In this pulse, continued stability shows the majority of consumers expect little change in their shopping channel habits across online, in-store and click and collect in the next six months. In-store shopping remains largely stationary year-on-year as the most common medium of consumption in 2022 (43%), whereas use of mobiles/smartphones (34%), PCs (23%), and tablet consumption (15%) have all marginally declined. The survey finds there is a continuing trend in consumers stating they never purchase products via tablets (51%), smart home voice assistance (64%) and wearable devices (71%). These numbers are all on the rise since the last PwC Global Consumer Insights Pulse Survey in June 2022.

Adoption of the Metaverse as a shopping channel is still in its early stages of adoption, however the medium still remains underutilized, with only one-quarter (26%) of respondents having used the platform for entertainment, virtual experiences or purchasing products in 2022. The largest portion of these users have primarily employed the Metaverse for virtual reality (VR), i.e., playing games or watching a movie (10%), joining a virtual world, i.e., experience a retail environment or concert (9%), or purchasing a digital product, such as a Non-Fungible Token, or NFT (9%). Those most likely to engage in metaverse-related activities: India (48%), Vietnam (43%) and Hong Kong (42%), as well as Millennials (36%).

All the while, as online shopping continues to grow in volume, consumers are increasingly wary of data privacy. Almost half (47%) say they are extremely or very concerned when interacting with social media companies, third-party/portal travel websites (36%), healthcare (34%), and consumer companies (32%). Countries including India and the Philippines are most concerned across such categories. As a result, almost half (49%) say they don’t share more personal data than they have to, 32% are opting-out from receiving communications from these companies, and 26% have overall reduced their interaction with these types of companies.

“As an immersive digital platform, the Metaverse represents a significant opportunity for business transformation, particularly as a way to extend the shopping experience before and after a purchase takes place and to enhance the engagement with younger generations such as Gen Z customers, which are looking for more engaging and community connected experiences,” said Roberto Hernandez, global metaverse leader and chief onnovation officer, PwC U.S., in a statement. “At the same time, consumers are increasingly cautious of their data privacy, so retailers must ensure they are reflecting consumer attitudes in their immersive experiences if they are to see growth in online consumption.

“In the last six months, one in four consumers told us they used the Metaverse. That is an incredible number indicating that the technology is becoming a more prominent part of the consumer experience. Although macroeconomic factors in today’s marketplace may impact consumers in the short term, the future remains increasingly bright for the technology.”

PwC surveyed 9,180 consumers from Oct. 24 to Nov. 16 of 2022 via a 15-minute online quantitative survey. Interviews were conducted with consumers in 25 participating territories, and the survey was translated into 14 languages.

PwC: Packaged-Media Revenue to Decline 55% Through 2026

Consumer migration from packaged media movies to digital distribution continues, with new data from consulting firm PricewaterhouseCoopers (PwC) projecting that the U.S. home entertainment retail market will generate about $1.1 billion in revenue from the sales of DVD, Blu-ray Disc and 4K UHD Blu-ray  titles in 2026 — down almost 55% (or 17.5% annually) from revenue of $2.5 billion in 2022.

Sales of digital movies and TV shows should increase to $6.3 billion in 2026, from $5.6 billion this year. That includes $576 million from pay-TV operators and $5.7 billion from digital platforms, including Vudu, iTunes, Microsoft Movies and Redbox Digital, among others.

Digital rentals will remain flat at $1.7 billion, with $621 million originating from pay-TV operators and more than $1 billion from digital platforms.

Meanwhile, the U.S. subscription streaming video market will continue to flourish, as revenue grows exponentially. PwC contends the SVOD market will grow 8.5% annually to $33.6 billion in 2026, up from $25.3 billion in 2022.

Pay-TV Fighting Back with OTT Video

NEWS ANALYSIS — Consulting firm PricewaterhouseCoopers just issued a report contending over-the-top video revenue, spearheaded by subscription VOD stalwarts Netflix, Amazon Prime Video and Hulu, is projected to top $30 billion by 2022.

Indeed, SVOD revenue represented nearly 80% of OTT video revenue in 2017 — a percentage that is expected to inch past 81% by 2022 fueled by original programming.

So, what is the pay-TV ecosystem — which lost about 3 million subscribers in 2017 — doing in response? Jumping on the OTT video bandwagon.

Rollout of standalone online TV platforms such as Dish Network’s Sling TV, Charter’s Spectrum TV Plus and AT&T’s DirecTV Now will contribute to the global pay-TV market, including satellite, cable, and IPTV services, generating $295 billion in revenue by 2022, according to ABI Research.

“OTT is becoming a preferred video viewing platform due to its low-cost and availability on multiple devices without a long-term contract requirement,” Khin Sandi Lynn, industry analyst at ABI Research, said in a statement.

Pay-TV operators — notably Comcast Cable with its X1 set-top — are embracing broadband to provide OTT service together with traditional TV.

Swedish cable operator Com Hem recently launched Android-based TV Hub, which allows subscribers to access linear TV channels and streaming services. Broadband-based set-top boxes are a good option for pay-TV operators to compete with OTT service providers while maintaining customer loyalty, according to ABI.

“Pay-TV and OTT offerings can vary dramatically between regions and between countries in terms of content availability and price,” said Lynn. “OTT adoption in mature markets will impact pay-TV adoption there, but the more reliable delivery and all-in-one nature of pay-TV will prove valuable in those developing markets.”