As the cost of living crisis continues to rise globally, consumers have drastically adjusted their spending behaviors, with the majority (53 percent) of global consumers “holding back” on non-essential spending. Fifteen (15) percent of consumers have stopped non-essential spending altogether, according to the 2023 PwC Global Consumer Insights Pulse Survey, which captured the views of 9,180 consumers across 25 territories.
The gloomy economic climate has triggered concerns around personal financial situations, where 67 percent of Filipino consumers report being “extremely” or “very concerned” with their situation. Seventy-six (76) percent of Filipino consumers also say they expect to slash discretionary spending (compared to 73 percent of respondents in Asia-Pacific, and to 69 percent globally as a whole). Cutbacks impact some discretionary (non-essential) categories more sharply – for instance, half of Filipino consumers expect to spend less on travel.
Spending ‘pull backs’ take a different shape across non-essential categories – including travel, luxury and premium products, consumer electronics, and fashion – so expect to see the greatest portion of consumer spend reductions over the next six months. The groceries category is expected to decline the least. Besides travel, Filipino consumers report that they also expect to spend less on luxury products because cost increases are prohibitive (49 percent), consumer electronics (45 percent) and fashion (42 percent).
In 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. For Filipino consumers, however, ‘phygital’ is now a thing. Online shopping is increasingly the go-to for Filipino consumers; nonetheless, physical shopping remains key to product quality assurance and in-store experience. And with hybrid working on its way out in the Philippines, and in-office work being the norm again, the resulting changes to mobility patterns skews channel preferences (e.g., quick grocery run vs. pantry filling) and formats (planned vs. impulse).
Sustainable products are in-demand from consumers
Despite a planned spend reduction and a challenging economic environment, consumers say they are still willing to pay more for sustainable product types. Overwhelmingly, 91 percent of Filipino consumers are amenable to spending more for recycled materials (compared to 78 percent of global respondents), 90 percent for locally sourced products (compared to 77 percent as a whole), 88 percent for ethically produced products, 83 percent for cruelty-free ingredients and 80 percent for products made by reputable companies with ethical practices (collectively compared to 75 percent of global respondents). For companies, this could mean reshaping their portfolios whether through innovation or mergers and acquisitions (M&A).
Data privacy creates concern
All the while, as online shopping continues to grow in volume, consumers are increasingly weary of data privacy. Almost half (47 percent) of consumers globally say they are extremely or very concerned when interacting with social media companies, third-party/portal travel websites (36 percent), healthcare (34 percent), and consumer companies (32 percent). Among Filipino consumers, 56 percent say they don’t share more personal data than they have to, 43 percent opt out from receiving communications from these companies, and 43 percent have managed/rejected data privacy terms.
Rakesh Mani, Partner and Southeast Asia Consumer Markets Leader, PwC Southeast Asia Consulting, said: “Winning companies will prioritize greater focus and flexibility during this spell of disruption and uncertainty. This means taking a sharper position on one’s differentiating capabilities while gaining a deep understanding into demand patterns across shoppers and channels, planning and forecasting processes, supply chain realities, and the workforce and digital infrastructure that bring it all together.”
Veronica Bartolome, Consulting Managing Partner, PwC Philippines, added: “One of the lessons the past years has taught us is that focusing on profitability is no longer enough. As consumers deepen their understanding of environmental impact and societal well-being, so should companies broaden their definition of brand value and overall purpose. Such and many other pandemic-induced consumer behavior changes have pushed companies to adapt their operations from being sales-focused to being customer-focused through reshaping of portfolios and brand innovation.”