The rising cost of living is impacting shopping decisions among consumers across Indonesia, Thailand and Vietnam (SEA). An EY survey found that SEA consumers are worried about rising cost of living (SEA 89%, global 94%), especially when it comes to electricity, gas and water, petrol and fuel, as well as groceries and household essentials. In order to curb the impact of inflation on spending, 69% of SEA consumers (global 49%) are purchasing only the essentials and 55% (global 51%) are spending less on non-essentials.
Notably, fashion accessories topped the list of product categories SEA respondents will consider spending less on, as cited by 59% of respondents (global 61%); followed by toys and gadgets (SEA 47%, global 51%); home furniture (SEA 45%, global 41%); and clothing and footwear (SEA 45%, global 44%).
This is according to the 13th edition of the EY Future Consumer Index (FCI), which surveyed more than 22,000 consumers across 28 countries, including 3,000 respondents from SEA.
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 realizing savings and are seeking ways to limit spending on non-essential categories. With changing consumer behavior, it is more important than ever for consumer products and retail (CPR) to review their product, pricing and marketing strategies for optimization and effectiveness.”
Big shopping and sales events drive consumer participation
Large sales events continue to attract consumers, with 77% of SEA consumers (global 61%) participating in them, and 71% (SEA and global) holding off on making some purchases until the next one.
Online shopping ranks high in preference when it comes to deal hunting and actual purchase, with 56% of SEA consumers (global 50%) preferring to shop mostly online and only 4% (global 10%) willing to shop mostly in-store. Looking at Southeast Asia data, the shift in shopping modality is evident compared with last year’s FCI results. Year on year, between 2022 and 2023, there is an 11 percentage point increase in preference for online shopping and an 11 percentage point decrease for in-store shopping here in the region.
Opportunity to enhance trust in artificial intelligence (AI)
In examining how AI influences consumer behavior, just 19% of SEA consumers (global 18%) indicated that they have a good understanding of AI and its uses. Similarly, consumers are less trusting toward the recommendations by AI. Less than a third of respondents (SEA 29%, global 21%) trust AI-generated promotions and deals as well as product purchase reminders based on previous purchases (SEA 28%, global 22%).
Gergele adds: “Algorithms driven by AI can analyze data from various sources, including website visits, social media interactions and purchase history to gain deep insights into consumer behavior. These insights in turn inform personalized product recommendations, marketing messages, customized products and promotions, enhancing the overall consumer experience.”
How sustainable shopping habits vary across generations
The survey also found that SEA consumers want to adopt more sustainable shopping habits. More SEA consumers are bringing reusable shopping bags to the store as well as reducing or recycling packing material after use. Interestingly, the majority of respondents believe that the responsibility of driving positive and environment outcomes falls on the government (SEA 87%, global 77%) and companies (SEA 83%, global 73%), rather than consumers themselves.
Gergele says:
“Against the increasing awareness of sustainability issues globally, CPR companies face heightened expectations to prioritize sustainability. To do so, they need to seamlessly integrate sustainability into the organization’s structure and operational model. 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.”
