Irish consumers fundamentally changing their shopping habits – PwC Ireland's latest Consumer Insights Pulse Survey

Despite higher prices, spending on a number of categories is still set to increase over the next six months. Many Irish consumers are happy to pay a higher price for local produce. In-store shopping remains key to the Irish consumer. More Irish consumers will shop locally in the next six months compared to global counterparts. ESG factors along with data security strongly influence brand trust. Ireland lags global counterparts on virtual reality usage, but opportunities are immense.

These are some of the key findings from PwC's Consumer Insight Pulse Survey 2022, which captures the views of over 9,000 consumers across 25 countries including over 500 in Ireland. This press release deals with the Irish survey findings with global comparisons where relevant.

Over a third (36%) of Irish consumers say that recent price increases are impacting their purchasing affordability to 'a great extent'. A further 58% say this affordability is impacted to 'some extent'. 35% of respondents confirmed that they are working in a hybrid way while 57% are required to be physically located at their workplace. Nearly a third (32%) of Irish consumers expect their spending on products and services to fall in the year ahead; 44% expect this to remain the same while 25% expect it to increase.

Fundamental change in shopping habits – new consumer trends are taking hold

The survey reveals that consumers have made a fundamental change in their lifestyle and purchasing habits as a result of the COVID-19 pandemic. This change is more pronounced in Ireland in several areas compared to global counterparts. The survey shows that many of these habits have become ingrained and will actually strengthen over the next six months.

Due to the pandemic, 69% of consumers surveyed said they have increased their shopping online (Global: 63%). Over half (57%) increased their buying from retailers local to them (Global: 36%). 41% are buying across a variety of retailers (Global: 33%).

Looking ahead, consumers expect to do more of the same in the next six months:

• 46% expect to shop more from retailers close to them (Global: 36%)
• Indicating a return to the store, 45% expect to shop more in physical stores and is higher than global counterparts (33%)
• 42% expect to shop more online (Global: 50%) and is highest among millennials (51%) and Gen Z (56%) compared to Gen X (28%) and baby boomers (24%)
• 40% will buy more from retailers that provide efficient delivery or collection (Global:41%)

John Dillon, Leader, PwC Ireland Retail and Consumer Practice, commented: "Just as consumers continue to change their shopping behaviours and preferences, actively searching for the best shopping experience and choice, retailers and manufacturers must move quickly to meet shifting demand and their own inflation and supply chain pressures. We don't see these pressures easing anytime soon. Agile businesses that can manage through multiple disruptions while keeping their focus on the demands of their customers are in the best position to succeed in this tumultuous environment."

Irish consumers taking action to combat supply chain issues

With around 50% of Irish respondents identifying issues with stock availability in the last six months, it is clear that global supply chain issues are having a direct impact on the Irish market. Many confirm that they are taking action to address these issues. Over four out of ten (43%) say they are shopping at different retailers to meet their needs (Global: 37%). 31% are using comparison websites to check product availability (Global:40%). Nearly a third (29%) of online shoppers say they are switching to in-store to better meet their needs (Global: 29%). If they are in-store shoppers, over one in five (22%) are switching to online (Global: 38%).

Willingness to pay more for for local products

Geopolitical uncertainties and supply chain issues are also leading many consumers to shop locally. Over three quarters (76%) of Irish consumers expressed a willingness to pay a higher than average price for products produced locally or domestically (Global: 80%).

Spending in next six months set to increase on a range of items

Irish consumers are decisive in their spending decisions despite higher inflation. Notably, 55% expect to spend more on groceries in the next six months; 52% expect to spend more on travel and 45% expect to spend more in restaurants and bars. However, perhaps a sign of what is to come, more than a quarter of consumers plan to reduce spending in a number of categories, including luxury or premium goods (37%), takeaway food (33%), virtual or online activities (31%) and fashion (26%).

Supply chain issues hampering shopping experience

Overall, rising prices for groceries is the greatest issue impacting the shopping experience cited by consumers shopping in-store (75%).

Supply chain issues are also seen as affecting the shopping experience, most notably being unable to purchase a product due to it being out of stock (online:51%; in-store 46%). For online shopping, products taking longer than expected to be delivered is an issue (45%). Longer queues or busier in-store locations (35%) are also issues.

ESG factors along with data security strongly influence brand trust

Environmental, social and governance (ESG) factors continue to influence consumer perceptions. For nearly half of Irish consumers surveyed, a company's actions relating to ESG often or always influences their trust in the company or their likelihood to recommend the company or brand to others.

For purchase consideration, governance (38%) and social (36%) factors outweigh a company's environmental commitment (25%). This perhaps reflects consumers' growing awareness of the wider ESG factors at play with greater focus on the societal impact of a business and how they are governed. Nonetheless, all aspects are critical and all form part of building consumer trust.

The most significant factors identified for fostering brand trust are around data security and the customer experience. Protecting personal data is ranked on top (Ireland: 55%; Global: 58%) for impacting brand trust to a great extent – an increase of 8 points in the past six months for Ireland. Other important factors are 'providing exceptional customer service' (53%) and 'always meeting expectations' (50%).

Consumers will also pay more for sustainable products. 72% of Irish consumers will pay a higher than average price for products that are recycled, sustainable or eco-friendly (Global:79%). The majority (65%) of Irish consumers will also pay more for products with a traceable or transparent origin (Global: 74%). Nearly half (45%) are willing to pay more for locally produced products to reduce their carbon footprint.

Ireland lags global counterparts on virtual reality, but opportunities are immense

With just 22% of Irish consumers (Global: 32%) having used some form of virtual reality (VR) in the last six months, the impact of VR and the metaverse as a consumer channel is just starting to be seen. There are immense opportunities for companies and retailers to integrate the Metaverse into their wider omnichannel strategies. In Ireland, 40% of consumers have heard of VR but have never used it (Global: 34%). Although gaining interest, Ireland lags global counterparts. For example, 11% of Irish consumers confirmed that they have used VR headsets (to play games or watch a movie) compared to 16% globally. 7% have joined a virtual world (e.g. to experience a retail environment or concert) compared to 11% globally. The biggest uptake is with younger consumers (18-24 years) where VR headset usage is at 39%.

At the same time, 5% of Irish consumers purchased products as a result of testing them or browsing stores via VR (Global:10%).

Owen McFeely, Director, PwC Ireland Retail and Consumer Practice, concluded: "Virtual reality is in early adoption, but already having an impact. The convergence of physical stores with online shopping over multiple devices has defined consumers' omnichannel experience. Now VR and the metaverse are adding an entirely new dimension. Although the metaverse is still an emerging channel, companies and retailers will increasingly need to consider it as part of their omnichannel presence".

"In this changing environment, we are seeing a whole new world of consumers emerge who are more conscious about the wider ESG agenda, will only buy from trusted brands and still want value but who are happy to purchase on their terms. Meeting these different expectations is challenging but those retailers and brands who seize these opportunities will be the winners".