Consumers’ behaviours, technological preferences and expectations continue to evolve. How can companies meet them where they want to be?
As 2023 unfolds, powerful internal and external forces are weighing on consumers and companies, producing frictions that can gum up the gears of commerce and stand in the way of more satisfying customer experiences. Concerned about inflation and the cloudy macroeconomic climate, consumers are realigning their shopping habits and adopting cost-cutting behaviours. Fully half of all consumers are either very or extremely concerned about their own personal financial situation. And 96% of surveyed consumers intend to adopt some type of cost-saving behaviour over the next six months. Still, eager to resume their pre-covid habits, they’re returning to stores and travelling again. Empowered by technology, they’re seeking and demanding seamless in-store and online experiences that better suit their lifestyles—and pocketbooks.
Source: PwC’s February 2023 Global Consumer Insights Pulse Survey
To a large degree, covid continues to influence the experiences of consumers and the industries that cater to them. E-commerce grew massively during the pandemic in part because in many areas it was the only type of commerce available. Some of that boom is subsiding. But what seem like short-term declines may simply be mean regression in the context of long-term growth; 43% of consumers said they plan to increase online shopping in the next six months. These are among the central findings of the latest Global Consumer Insights Pulse Survey, conducted in December 2022 among 9,180 consumers across 25 territories.
The demand and supply shocks brought about by covid continue to ripple through the economy and factor into consumers’ decision-making, habits and attitudes. Yet, even as they take defensive actions, consumers remain resilient, demanding and eager to experiment. Consumers are seeking less friction—but that doesn’t necessarily mean opting only for e-commerce, or for physical experiences that are entirely mediated by technology. They’re continuing to experiment with the next generation of digital platforms, including the metaverse. And as more of everyday work and leisure life continues to go digital, mobile and virtual, concerns about data security and privacy remain a significant source of friction.
The survey makes it clear that companies must go beyond responding to consumers’ evolving attitudes, actions and aspirations. They must identify, isolate and mitigate the many frictions that stand between them and their customers, and between their customers and optimal experiences. Beyond meeting consumers where they are—physically and psychologically—companies must invest to ensure that they’ll be able to meet them where they will be in the future.
of consumers have changed non-essential spending in the past six months.
identify as non-hybrid workers.
plan to increase online shopping in the next six months.
have participated in metaverse-related activities in the last six months.
In 2022, a source of friction rarely seen in our prior surveys entered the field: inflation. Though inflation in a number of markets is coming off the boil, it remains a powerful factor. It would be expected to dampen consumers’ spirits, because prices have been rising more rapidly than incomes in many parts of the world. For many consumers, especially in the US and Europe, this may be the first experience of sustained increases in price levels.
Half of consumers are extremely or very concerned about their personal financial situation (50%), with one-fifth extremely concerned (22%). And looking ahead, fully 96% of surveyed consumers intend to adopt cost-saving behaviours over the next six months. The most pessimistic group (42%) expects to significantly decrease their spending across all retail categories. They’re less likely to travel, for instance, and more likely to switch to a cheaper brand of a particular product or even go without a regularly used one. In groceries, the area where consumers are least likely to cut back, 24% said they plan to decrease spending, compared with 12% in the prior survey.
There are some exceptions, though. Consumers have displayed a willingness to put their money where their values are. More than 70% said that ‘to some or to a great extent’ they’re willing to pay more for food produced by local farmers and for goods made by a company known for ethical practices, such as supporting human rights or avoiding animal testing.
Considering the current economic climate and potential cost-of-living impact, how concerned are you about your personal financial situation?
Question 2: Considering the current economic climate, which of the following statements best describes your situation regarding non-essential spending?
Select a generation to explore varying levels of concern about the economy.
|Answers||All generations||Generation Z||Millennials||Generation X||Baby Boomers||Greatest Generation|
|Not concerned and haven’t changed behaviour on non-essential spending||10%||8%||10%||8%||14%||25%|
|Concerned but haven’t changed behaviour on non-essential spending||20%||22%||21%||17%||16%||17%|
|Concerned to some extent and have taken action on non-essential spending||28%||31%||26%||28%||33%||34%|
|Most concerned and have taken action on non-essential spending||42%||40%||43%||47%||37%||25%|
Diving deeper into consumers’ shopping and behaviour trends, some shifts were evident from the prior survey, conducted early in 2022. When asked about their shopping frequency (daily, weekly, etc.) over the last 12 months across different channels, consumers in the present survey still chose shopping in-store as the most popular channel, holding steady at 43%. Use of mobile phones and smartphones was next (34%), followed by PCs (23%).
In a nutshell, many of the trends that got supercharged in the depths of the covid crisis, which is still ongoing in many parts of the world, have unwound. In-store shopping has rebounded. But the data also shows that the long-term growth trends remain intact. Looking ahead, when consumers were asked about how their spending and shopping behaviour might change in the next six months, 43% said they plan to increase online shopping, down from 50% in our last survey. At the same time, plans to increase shopping in physical stores dropped significantly, too, from 33% to 23%.
Perhaps most important, what people expect and experience in all shopping environments—physical and digital—is changing. And it’s incumbent on market participants to meet consumers in both physical and digital spaces—and to meet their changing expectations. As is evident throughout the survey, it’s not an either–or proposition. Increasingly, consumers are saying that they want the physical shopping experience to be enhanced, facilitated or mediated by digital technologies: call it phygital.
Asked to rank what factors would most enhance their in-store shopping experiences, 27% of respondents put access to knowledgeable and helpful sales associates on top—with half of Baby Boomers ranking that as the leading factor. At the same time, 16% of all respondents said the ability to use self-service checkout kiosks was their most-favoured attribute, followed closely by in-store use of a retailer’s website or mobile app to browse for particular products (15%). Next, at 12%, was the ability to use retailers’ “scan-and-go” devices and apps, allowing shoppers to bypass both staffed checkout lanes and self-service kiosks.
More tellingly, consumers who said they intend to spend more time in brick-and-mortar environments in the coming six months signalled that they expect more technological bells and whistles. They said they’d be attracted by in-store entertainment (34%), immersive digital experiences (30%), such as donning a virtual reality (VR) headset to try out new products, and being able to book appointments with a sales adviser or personal shopper (28%).
There are continuing signs that supply chain disruptions are affecting day-to-day shopping behaviour, including which channels consumers choose to make purchases. Thirty-nine percent of those surveyed remain most likely to shop at multiple retailers—whether in-store or online—which is two percentage points higher than in our earlier survey. And more than one-third said that they visit multiple websites to check for availability of the products they want (38%).
Nearly seven in ten of those surveyed said that rising prices are having the greatest impact on their in-store shopping experiences (68%), followed by products being out of stock (42%) and the hassle of standing in longer queues (39%). Similarly, when asked to identify issues they’ve experienced ‘almost always or frequently’ while shopping online in the last three months, 48% named the rising prices of household goods. Nearly one-quarter cited the inability to buy a product because it was out of stock or that delivery time was longer than they were told (both 24%).
In this survey, as in the previous one, we asked consumers about their ways of working. More than one-third (36%) said they’re in hybrid mode, in which they can work from home or the office or other job sites. That’s down from 41% in the last survey. Indeed, 63% of respondents identify as non-hybrid, meaning they’re required to be in their office or other place of work or at home all the time, up from 57% in the prior survey. Digging deeper, 56% of respondents indicated they’re now required to be physically in their place of work all the time, a substantial increase from 47% in the previous survey. Only 7% said they work exclusively from home, down from 10% in the previous survey. As would be expected, these ways of work differ across territories, although the hybrid model is most prevalent in Southeast Asia.
Question: Thinking about what your employer requires at this time, which of the following statements best reflects a typical working week for you?
Select a territory to see how working-from-home options differ according to location.
I am able to choose how and where to work.
I am required to work in a hybrid way.
|Working status||Global||Australia||Brazil||Canada||China||Egypt||France||Germany||Hong Kong||Indonesia||Japan||South Korea||Malaysia||Mexico||Philippines||Saudi Arabia||Singapore||South Africa||Spain||Thailand||UAE||USA||Vietnam||Ireland||India||Qatar||Western Europe||Asia Pacific||Africa and Middle East||Americas||SEAC|
|Hybrid: Required to work in a hybrid way||26%||25%||28%||21%||34%||32%||23%||24%||26%||30%||16%||15%||20%||31%||27%||32%||35%||25%||27%||32%||29%||16%||40%||22%||29%||32%||24%||27%||29%||24%||31%|
|Hybrid: Able to choose how and where to work||10%||11%||10%||12%||9%||13%||7%||10%||5%||8%||14%||6%||11%||10%||11%||7%||6%||15%||7%||21%||5%||10%||8%||11%||10%||6%||9%||10%||10%||11%||11%|
The goal of frictionless retail is to remove the barriers that customers face in stores, whether it’s standing in a checkout line or having to swipe a card to pay. In PwC’s recent US customer loyalty survey, 82% of respondents say they’d be willing to share some kind of personal data in exchange for a better customer experience. Conveniently for retailers, frictionless technologies are seen as a way to reduce labour costs. But consumers also have high and growing expectations for assistance and convenience that would seem to introduce more friction. That dichotomy presents a mix of opportunities and challenges for retailers, which are explored in a recent PwC UK report on the future of frictionless retail. Computer-vision AI technologies—which enable consumers to enter a store, pick up their products and simply walk out without the need to scan, queue or check out—are slowly being rolled out across retail markets. Our research shows that both consumers and retailers can benefit from these digital developments.
But that doesn’t mean retailers can reflexively reduce their workforces. They’ll likely have the same number of employees, but they’ll need to train new hires and reskill or upskill existing ones. Also, because data collection and analysis inherently grow with these systems, tech developers and retailers must be able to assuage consumers’—and regulators’—concerns about the privacy, security and dissemination of their personal information.
Consumers aren’t approaching where to shop as an either–or proposition but as a this-and-that set of options.
E-commerce, and the digital technologies that enable it, are designed to remove friction. But they also create their own frictions, many of which have been exacerbated or aggravated during the disruptions of the past two years. Since the onset of the pandemic, e-commerce consumers have experienced higher delivery costs, longer wait times, bungled deliveries and stock shortages. In our survey, more than half of consumers who opt to shop in physical stores or to place orders online and pick up at the store (54%) said they do so because it offers them the ability to check that products are not broken or faulty and to be certain that they’re the products they ordered. Another reason, cited by 41% of those planning to shop in physical stores, is that they simply missed doing so during pandemic lockdowns. The bite of higher costs and concerns over an economic downturn are also playing a role: 40% of consumers who intend to increase in-store shopping and decrease online shopping said it’s because delivery costs are too high.
These trends in consumer preferences point to a hybrid shopping strategy that producers and retailers are grappling with: consumers aren’t approaching where to shop, regardless of what’s on their list, as an either–or proposition but as a this-and-that set of options. This duality was apparent well before the pandemic. Despite persistent economic and social headwinds, consumers aren’t simply switching from online to in-store shopping. Rather, they’re choosing one or the other—or both—based on preferred attributes of each, such as in-store technology or improving delivery times and costs for online orders. These trends are likely to continue throughout 2023.
Source: PwC’s February 2023 Global Consumer Insights Pulse Survey
Digital environments are evolving, whether it’s the continuing rollout of 5G or the integration of shopping into social media apps. And so, a great deal of attention is being paid to what may be the next large-scale digital platform: the metaverse, which promises to erase many of the frictions between the digital world and the physical world. But the metaverse is still very much in its infancy, and is riven by its own set of frictions. As the PwC report Demystifying the metaverse concluded: ‘The metaverse is an evolution, not a revolution. And it’s one that business leaders should not ignore.’
The countries with the highest percentage of metaverse users have young populations and growing middle classes.
Our survey finds that various components of the metaverse are already available and being explored by consumers. Just more than one-quarter said they have participated in metaverse-related activities in the last six months for entertainment, virtual experiences or purchasing products (26%). For example, 10% have used a VR headset to play games or watch a movie, or for work-related activities. Nearly as many said they’ve experienced a retail environment or a concert virtually or they've purchased an NFT, or non-fungible token (both 9%).
Use of the metaverse varies widely by age and across countries. Not surprisingly, the younger the person, the more likely they are to engage with the metaverse. Demographically, young Millennials (36%) and Gen Z (31%) are the top metaverse users, while only 8% of Baby Boomers and 6% of the Greatest Generation cohort have used it. And the countries with the highest percentage of respondents who said they had used the metaverse in the past six months were India (48%) and Vietnam (43%)—countries with young populations and growing middle classes.
Whether they’re using the metaverse or not, consumers already inhabit a thoroughly digital universe. The billions of daily transactions, interactions and downloads that occur digitally are both enabling and compelling a pervasive sharing, collection, analysis and dissemination of consumer data by companies, organisations and governments across the globe. Control over all of that data has become a source of friction for consumers. Asked about their level of concern about personal data privacy when interacting in routine activities and with various entities, nearly half said they are extremely or very concerned when engaging with social media (47%). Concern is also high regarding the media in general (41%), third-party travel websites (36%) and healthcare companies (34%).
There’s lesser but still substantial concern among respondents when engaging with consumer companies (32%) and retailers (30%). It’s possible that retail performs comparatively well here because the return for consumers on providing data is clearer and more transparent, in the form of vouchers, discounts and special offers.
Consumers are acting on their concerns. Half said they don’t share any more personal data than necessary (49%), and 32% opt out of receiving emails, texts and other communications. And this is another sort of friction. Companies will be more effective and efficient and provide better value to their customers if they have more data about them. But when it comes to both regulation and behaviour, there are efforts to reduce the flow and use of data. To regain trust, leaders need to persist in their efforts to establish innovative data-privacy systems and operations—especially as lawmakers and regulators consider legislative remedies.
Question: To what extent, if at all, are you concerned about the privacy of your personal data when interacting with the following types of companies? (Respondents answering ‘extremely concerned’ or ‘very concerned.’)
Select a channel to see to what extent each generation and region have privacy concerns.
|Category||Social media||Media||Third-party/portal travel websites||Healthcare||Travel operator websites||Consumer companies||Retail companies|
|Africa and Middle East||51%||47%||39%||36%||34%||35%||34%|
As we look ahead, there are three essential sets of frictions.
There’s a set of frictions that are beyond the control of companies—macro levels of inflation, a global recession or contraction, wars, and disruptions to trade caused by the pandemic. In response, consumer-facing companies must focus on resilience, conduct scenario planning, and ensure that their supply chains, operating models and staffing levels are fit for a range of potential short-term outcomes.
There’s a set of frictions that companies themselves can introduce relating to experiences—by not having sufficient staffing in stores or by failing to meet or manage expectations surrounding the experience. To guard against this, companies should focus on operational excellence and continue to experiment and innovate with the use of technology in stores and the creation of satisfying phygital experiences.
And there’s a set of frictions that consumers themselves introduce into the system, including changes in behaviour due to economic or personal circumstances. In response, companies must monitor and stay on top of the latest trends, and plot investments and initiatives that will meet customers wherever they are and build loyalty.
The term frictionless retail may be an important buzzword and a worthy goal. But a deep understanding of what consumers think, the stresses that concern them, and the demands and expectations they have should lead to a more sophisticated and strategic understanding of the frictions that exist—and the steps necessary to mitigate or remove them.
The Global Consumer Insights Survey is a biannual study that seeks to keep a closer watch on changing consumer trends. For our February 2023 pulse survey, we polled 9,180 consumers across 25 territories: Australia, Brazil, Canada, China, Egypt, France, Germany, Hong Kong SAR, India, Indonesia, Ireland, Japan, Malaysia, Mexico, Philippines, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Thailand, United Arab Emirates, United States and Vietnam. The respondents were at least 18 years old and were required to have shopped online at least once in the previous year.