Yahoo Finance 89% of Southeast Asian consumers concerned about the rising cost of living: EY
EY's 2024 Future Consumer Index (FCI) reveals how consumers across Southeast Asia have been influenced by growing costs.
According to the 13th edition of accounting firm Ernst and Young’s (EY) Future Consumer Index (FCI), consumers in Southeast Asia (SEA) are learning to live with less with the region’s rising cost of living.
The global survey sourced for responses from more than 22,000 consumers across 28 countries, including 3,000 respondents from SEA.
Surveyees from the region have painted a picture of worry over the increasing cost of utilities such as electricity, gas, water, petrol and fuel, as well as groceries and household essentials, with 69% of SEA consumers purchasing only essentials, substantially more than the global number of 49%, while 55% of SEA consumers are spending less on non-essential items to global consumers’ 51%.
Under the categories of non-essential items SEA consumers were now less likely to spend on, fashion accessories topped the list with 59% of respondents indicating so, followed by toys and gadgets at 47%, home furniture at 45% and lastly, clothing and footwear at 45%.
Olivier Gergele, EY Asean consumer products and retail leader says: “The rising cost of living is hitting home for Southeast Asia’s consumers, who are concerned about realising savings and are seeking ways to limit spending on non-essential categories. With changing consumer behaviour, it is more important than ever for consumer products and retail (CPR) to review their product, pricing and marketing strategies for optimisation and effectiveness.”
New approaches
While SEA consumers have become more wary of leisurely spending, large sales events continue to be attractive, with 77% of these consumers having participated in such events compared to 61% of global consumers. That said, 71% of consumers in both SEA and around the globe agree on the strategy of holding off on making certain purchases until the sales event.
Meanwhile, online shopping is notably favoured by SEA consumers at 56%, while only 4% opt for in-store purchases. This preference is higher than the global average of 50% favouring online shopping and 10% preferring in-store purchases. Furthermore, the growing preference for online shopping among SEA consumers is evident from the 11 percentage point increase y-o-y and the 11 percentage point decrease y-o-y for in-store purchases between FCI 2022 and FCI 2023.
“Online shopping is here to stay. To effectively navigate the digital era, traditional retailers need to consider omnichannel strategies that seamlessly integrate online and offline shopping experiences, allowing consumers to shop in their preferred manner at any time,” says Gergele.
As platforms and companies continue to tap on the advent of online shopping, artificial intelligence (AI) has likewise become increasingly intertwined with advertising and purchase processing. SEA consumers however, have demonstrated a lack of understanding and trust towards AI and its uses, with only 19% of regional consumers indicating a confidence in doing so. Similarly, less than a third of respondents, with 29% in SEA and 21% globally, trust AI-generated promotions and deals, and just 28% of SEA respondents and 22% of global respondents have consumer faith in product purchase reminders based on previous purchases.
To this end, Gergele is confident that companies should ultimately benefit from AI-driven insights and an AI-driven supply chain, although the process will take tailoring and time.
She adds: “However, for such investments to be meaningful, companies need consumer buy-in. One way is to build trust by establishing themselves as leaders in data privacy and transparency over how consumer data is collected and used.”
One trend that SEA consumers have been quick to take to is sustainability. More shoppers in the region are reusing shopping bags and reducing or recycling packing material after use. Notably, both SEA and global consumers see governments at 87% and 77% respectively and companies as the primary bearers of responsibility for fostering positive environmental outcomes.
“Strong leadership support and a holistic approach will ensure that sustainability efforts become strategic drivers rather than mere additions. In a landscape where sustainability and ethical consumerism increasingly shape consumer choices, companies must embrace these trends, align their practices with evolving consumer expectations and diligently work toward sustainable growth,” concludes Gergele.
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