4 minute read 30 Jun 2021
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US Future Consumer Index 7: how to balance optimistic and hesitant consumers

Kathy Gramling
By Kathy Gramling

EY Americas Consumer Industry Markets Leader

25-year consumer products and retail veteran. Integration and teaming advocate. Passionate mentor and transformative leader. Wine enthusiast.

4 minute read 30 Jun 2021
Related topics Consumer products and retail FutureConsumer.Now COVID-19 Customer
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In the 7th edition of the EY Future Consumer Index, we explore US consumer sentiment amidst a summer social resurgence and pent-up demand.

Two questions to ask:

  • Are signs of optimism pointing to a long or short-term rise in consumerism?
  • How can retailers and CPG brands forecast consumer demand amongst a both optimistic and hesitant population?

By all accounts, consumers seem to be back. Airport lines are long, restaurant reservations are hard to come by, sporting event tickets are up for sale, and stores are open for business. Americans’ social appetites may be rising as fast as summer temperatures.

The latest EY Future Consumer Index points to a definite optimism among American consumers. One in five (19%) US consumers say COVID-19 is not impacting their lives, and another 33% say the fear of COVID-19 will be completely gone within six months. Since May 2020, the number of consumers who say they are extremely concerned about the pandemic’s impact on their freedom to enjoy life has decreased from 43% to 34%. Much like the baby boom of the earlier decades, are these sentiments the early signs of a consumer boom?

Almost. More than a year of anything can test resolve. While consumers are eager to get back to life as they knew it, there’s still an air of hesitation, with 56% saying the way they live has changed significantly and another 50% saying life will remain significantly changed even after COVID-19. How so?

EY - Future Consumer Index bar chart

For retailers and CPG brands, this means catering to each consumer wherever they are on the scale of hesitant to optimistic. The world may be reopening, and many consumers are out and about, but many still are reorienting themselves to a life of normalcy. Companies must balance consumers who may still prefer the safety and comfort of online with those returning to brick and mortar places who are seeking experiences. 

This reality also is true of long-term priorities. Affordability First and Health First remain the largest segments of future consumers. Over the last several months, however, immediate concerns about finances and health and safety have started to balance out with other priorities. Issues like the environment, societal change and experience are no longer on the backburner.

EY - Consumer long term priorities line graph

Four key focus areas for companies to address the hesitant optimism

1. Scenario planning

New outfits for those long-awaited events. Wedding gifts. Summer vacations. Dinners out. This summer could bring quite the rise in consumerism in an economy injected with stimulus money and pent-up consumer demand. But we can’t be sure how long a consumer boom will last or just how big it will be — is it just a short reaction to newfound freedom? Are there still consumers who are not yet comfortable going out into the world? Will we have a roaring summer and then taper off in the fall? Or are consumers ready to come out for the long run? Retailers and CPG brands will need to scenario plan the various possibilities for consumer demand over the next several months to understand the implications for inventory, supply chain, staffing and beyond.

2. Consumer data

The impact of recent times on consumers’ lives has changed who they are as shoppers. Consumers have different priorities and behaviors, so retailers and CPG brands cannot treat all consumers the same. This is where data becomes critical to understanding the target consumer and building a relationship with them. Companies will need to be much more intentional about how they look at their consumer holistically — not just how they shop and buy, but how they live, what they care about and how their purchase decisions are driven by the most important parts of their lives, including the societies where they live, their finances and families. A 360-degree view of the consumer is necessary to provide value in the right place and at the right time.

3. Price

Though consumers are getting back to life as they knew it, the price sensitivity brought on by the last year will not dissipate overnight. Consumers will still be discerning about the cost of the products they buy. Retailers and CPG brands must consider their pricing strategy, optimized product mix and balance consumers’ price needs with their expectations for service and convenience. Companies must consider price as a value-driver and relationship-builder.

4. Purpose

With more than a third of consumers identifying as Planet and Society First, an ESG strategy has never been more important. Consumers are becoming more aware and purpose-oriented, and the companies that follow suit will be positioned best for continued growth.

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66%

of US consumers agree that brands must behave ethically and in line with community expectations

More consumers are likely to purchase from companies that look after their employees, have a positive impact on society and actively engage in the community. Companies must become purpose-driven and transparent. That’s what creates trust with consumers. Consumers want to know what’s happening behind the curtain and understand the values of the companies they buy from, as well as what products they make and sell.

As companies and consumers alike become more purpose-led, it can’t be argued that ESG is a core pillar of purpose. As part of this month’s Future Consumer Index, we also dive deep into consumer sentiment on sustainability and how companies must prioritize ESG as a strategic imperative. Read it here.

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Summary

Pent-up demand and excess stimulus dollars and savings are fueling consumers to go out and spend amidst a nationwide reopening. Retailers and CPG brands must balance consumers who may still prefer the safety and comfort of online with those who are back in in-person seeking experiences.

About this article

Kathy Gramling
By Kathy Gramling

EY Americas Consumer Industry Markets Leader

25-year consumer products and retail veteran. Integration and teaming advocate. Passionate mentor and transformative leader. Wine enthusiast.

Related topics Consumer products and retail FutureConsumer.Now COVID-19 Customer
Upvote