Most Consumers Hold Back on Non-Essential Spending as the Cost of Living Rises

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 PwC. 15% of consumers have stopped non-essential spending altogether.

The 2023 PwC Global Consumer Insights Pulse Survey captured the views of 9,180 consumers across 25 territories. The survey found the majority of consumers expect to reduce their expenditure across all surveyed categories over the next six months, a significant decline in planned spend across all categories since the previous pulse survey, June 2022. Industries including luxury and premium products, travel, and fashion expect to see the greatest portion of consumer spending reductions over the next six months, whereas groceries are 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. 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 spending, Baby Boomers lead concerns to “some extent“ (33%) while taking action, whereas Millennials lead the way when “concerned“, but not changing behavior.

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 with larger queues and busier store locations (30%), as well as product availability (26%) impacting 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 to 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 spending, with 40% indicating they will look to treat oneself/others, whereas 39% view them as better quality. Groceries (24%) had the least reported planned spending reduction.