#United States #New York #Private Label #Brand Loyalty #Consumer Index

EY Future Consumer Index Insights

In the latest edition of the EY Future Consumer Index (FCI), a global survey encompassing 20,000 consumers across 26 countries, pivotal changes in consumer behavior in the U.S. have come to light. Over the last year, significant economic pressures have prompted 73% of American shoppers to alter their purchasing patterns. As inflation continues to influence everyday decisions, price sensitivity has emerged as a dominant factor in brand loyalty.

Key Findings on Consumer Behavior

The report indicates that half of U.S. consumers now regard price as the most crucial aspect when choosing products. The increasing recognition of private label products as cost-effective alternatives has reached new heights, with 76% of participants acknowledging the savings they provide—an impressive increase of 9 percentage points since September 2023. However, despite these savings, a notable 55% of those who have experimented with private labels eventually revert to established brands, primarily citing better quality, taste, or performance.

Changing Values in Consumer Preferences

This shift in consumer values reflects a broader trend where familiarity with brands is no longer sufficient to guarantee loyalty. Today's consumers prioritize price, quality, and value over brand recognition. Particularly among older shoppers (Gen X and Baby Boomers), there is a strong inclination to shop at discount retailers, warehouse clubs, and supermarkets, with 56% having adopted this trend compared to only 44% of younger consumers (Gen Z and Millennials).

Mark Chambers, EY’s Americas Retail Sector Leader, stresses that retailers must adapt to this evolving landscape by leveraging a variety of tools, such as customer intelligence platforms and innovative pricing strategies, to better align with the values of today's shoppers.

The Role of Brand Loyalty Amid Economic Challenges

While the rise of private labels poses challenges to established brands, 55% of Americans return to branded options after trying a private label. This statistic underlines the importance consumers place on quality, reliability, and perceived value. Notably, 71% of shoppers will choose an alternative brand if their preferred one is unavailable, and many are open to switching brands for better pricing.

Younger demographics (Gen Z and Millennials) show a heightened propensity to explore new brands, representing the most vulnerable segment within an uncertain market. In fact, 54% of this cohort is likely to switch brands, illustrating the ongoing struggle for traditional brand loyalty.

Recommendations for Brands Moving Forward

Brands aiming to retain or attract market loyalty must pivot their strategies to demonstrate tangible value, not solely rely on competitive pricing. The Consumer Price Index (CPI) continues to rise, influencing how consumers perceive products, as they increasingly associate private labels with quality comparable to established brands. According to the findings, 72% of U.S. consumers believe that private-label offerings meet their needs just as effectively as their branded counterparts, reiterating the shifting competitive landscape.

However, brands must navigate this terrain cautiously, particularly when considering product innovations. The FCI reveals that nearly half of U.S. consumers are skeptical about changes in products, often viewing them as cost-cutting measures. As Rob Holston, EY’s Global and America's Consumer Products Sector Leader, notes, a deep understanding of the price-value relationship is critical for brands to thrive amidst these economic challenges.

Conclusion

The evolving patterns reflected in the EY Future Consumer Index highlight a notable transformation in consumer loyalty and perceptions amid economic barriers. As companies navigate this unpredictable market, those that can effectively balance product quality with price and innovation will likely emerge as leaders. The imperative is clear: brands must resonate more profoundly with consumer values and needs to secure a lasting connection in this competitive environment.