- 95% of Thai consumers are concerned about the rising cost of living
- 92% of Thai consumers are delaying purchases until the next big sales event
- 22% of Thai consumers trust AI-generated promotions and deals, highlighting the need for retailers to work on enhancing trust in technology
Bangkok, 2 May 2024. The rising cost of living is impacting shopping decisions among consumers across Thailand, Indonesia, and Vietnam (SEA). An EY survey found that 95% of Thai consumers are worried about the rising cost of living (SEA 89%, global 94%), especially when it comes to electricity, gas and water, petrol and fuel, as well as groceries and household essentials. In order to curb the impact of inflation on spending, 74% of Thai respondents (SEA 69%, global 49%) are purchasing only essentials and 62% (SEA 55%, global 51%) are spending less on non-essentials.
Notably, fashion accessories topped the list of product categories all respondents will consider spending less on (Thailand 65%, SEA 59%, global 61%). For Thai respondents, clothing and footwear (57%) was second top listed; followed by home furniture (53%). While SEA and global respondents indicated they would spend less on toys and gadgets (SEA 47%, global 51%); and home furniture (SEA 45%, global 41%).
This is according to the 13th edition of the EY Future Consumer Index (FCI), which surveyed more than 22,000 consumers across 28 countries, including 3,000 respondents from SEA and 1,000 respondents from Thailand.
Olivier Gergele, EY Asean Consumer Products and Retail (CPR) Leader says:
"The rising cost of living is hitting home for Southeast Asia's consumers, who are concerned about realizing savings and are seeking ways to limit spending on non-essential categories. With changing consumer behavior, it is more important than ever for consumer products and retail (CPR) companies to review their product, pricing and marketing strategies."
Narisara Phatanaphibul, Consulting Leader, EY Thailand says:
"Due to economic pressures, Thai consumers are becoming more selective, re-evaluating their priorities, and cutting back on spending. CPR companies need to adjust their business playbooks to match the needs of their customers. They increase the use of online channels, offer delivery services, and provide a broader range of products to encourage customer purchases."
Big shopping and sales events drive participation, but online shopping is a necessity
Large sales events continue to attract consumers, with 72% of Thai consumers (SEA 77%, global 61%) participating in them, and 92% of Thai respondents (SEA and global 71%) holding off on making some purchases until the next one.
Online shopping ranks high in preference when it comes to deal hunting and actual purchase, with 59% of Thai consumers (SEA 56%, global 50%) preferring to shop mostly online and only 5% (SEA 4%, global 10%) willing to shop mostly in-store. Looking at Thailand data, the shift in shopping modality is evident compared to last year's FCI results. Year on year, between 2022 and 2023, there was a 21-percentage point increase in the preference for online shopping and a 16-percentage point decrease for in-store shopping.
Narisara says:
"Online shopping is growing, and it is for the foreseeable future for all retailers. They need to develop omnichannel strategies that leverage technologies such as AI and big data to boost online sales, increase profitability, and enhance customer loyalty. In addition, retailers need to make consumers' lives easier by providing a user-friendly purchasing process and seamless delivery service."
Opportunity to enhance trust in artificial intelligence (AI)
When examining how AI influences consumer behavior, just 16% of Thai consumers (SEA 19%, global 18%) indicated that they have a good understanding of AI and its uses. Similarly, consumers are less trusting toward the recommendations by AI. Less than a third of respondents (Thailand 22%, SEA 29%, global 21%) trust AI-generated promotions and deals as well as product purchase reminders based on previous purchases (Thailand 21%, SEA 28%, global 22%).
Gergele says:
"For CPR companies, AI-driven insights can enhance the consumer experience through personalized product recommendations and marketing messages. An AI-driven supply chain enables agile decision-making as companies can anticipate demand and supply shifts and adjust production and distribution accordingly. However, for such investments to be meaningful, companies need consumer buy-in. One way is to build trust by establishing themselves as leaders in data privacy and transparency over how consumer data is collected and used."
Narisara adds:
"The future of AI in online shopping hinges on this delicate balance of innovation and trust. Businesses need to focus on securing personal information and maintaining transparency in their AI applications. The deep insights gained from AI analysis will create meaningful benefits through enhanced customer experiences and business growth."