Affordability, Value, and the Cost of Living: Balancing Budget and Lifestyle

July 2023

Consumers are facing increased pressure from rising prices as global inflation reaches 7% in 2023. The impact of higher costs of living is felt from top earners in developed markets to struggling households in emerging and developing countries. Factors such as simplified solutions, extended value ranges and added-value features have proven to be successful. Business that understand the diverse needs, desires and spending priorities of consumers will continue to maintain demand.

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Key findings

Consumers have diverse needs, desires and shifting spending priorities

Global consumers continue to struggle with the cost-of-living crisis, as inflation remains high and regular price increases are implemented. Businesses that understand the diverse needs, desires and shifting spending priorities of consumers have developed solutions aimed at maintaining demand instead of shifting the burden onto consumers with higher prices for maximum margins.

Diverse realities of the rising cost-of-living impact felt globally

Different income groups’ spending habits vary depending on the market. The impact of the cost-of-living crisis trickles down through varying levels, impacting both top earners and struggling households. Companies have reacted in a range of ways, from reactionary price increases to more empathetic solutions that appeal to certain consumers’ spending priorities.

Developed market consumers seeking simplicity and added value

Developed market consumers are seeking to simplify their lives by spending less and saving more. The important differentiating features between products and services are no longer only “value for money” but also “added-value” aspects that align with consumer needs and desires. Products and services that proclaim these added-value features are proving successful.

Mixed reactions in emerging and developing markets

A significant proportion of spending is dedicated to essential items in emerging and developing markets, while emerging Asia is showing strong resilience. Companies need to understand the different regions’ response to the cost-of-living crisis and develop strategies that acknowledge the local cost-saving habits and measures.

Scope
Key findings
Exploring affordability, value and the cost of living
Local impacts of a global crisis
Balancing budget and lifestyle uncovered
The cost-of-living crisis looks different around the world
Poorer households face a greater challenge in maintaining their standard of living
Unilever: Recognising that raising prices has not been an effective strategy
Co-op and Microsoft team up to redistribute surplus food
Empathetic solutions instead of reactionary price increases
Finding simplicity in order to reduce expenditure
Demand for value ranges supports supermarkets, while discounters guarantee affordability
Team Repair: A sustainable monthly subscription teaching children science, tech and repair
Kaufland: Mixing sustainability and health and wellness into private label assortment
Double down on value features in developed markets
Consumers in Sub-Saharan Africa struggle due to unfavorable economic environment
Casava brings insurance to the mass market via digital app
Emerging and developing Asia is resilient in the face of rising costs
Shwapno expands to meet the growing demand of Bangladeshi urbanites
Titan’s Taneira expands to tap into growing demand for branded ethnic wear
Custom strategy needed in different emerging and developing countries
Key takeaways
Balancing budget and lifestyle: How to win
Evolution of affordability, value and the cost of living
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