Consumers around the world are trying to remain resilient in the face of continued cost of living pressure, economic worries and social disruption. Increasingly, they’re adopting new technologies to help them shop, live and work differently — often with a focus on making their everyday lives more affordable.

The latest edition of the EY Malta Future Consumer Index indicates that 86% of respondents will put price and value for money as their key purchasing criterion over the next three years – a natural response given the current macro-environment we are living in. However, other important purchase determinants are emerging among respondents, with health (71%), sustainable sourcing (31%), brand (25%) and personalisation (15%) being highlighted as important factors looking ahead.

Our research shows that people are thinking about how they use technology in their behaviour. The role of the brick-and-mortar store remains important, but increasingly, consumer segments are looking at hybrid or online purchasing options for most product categories. Their experiences of using digital tools at home and at work are influencing what and how they consume. There are significant opportunities for brands that understand and shape these changing perceptions, and that anticipate the transformative changes they could lead to.

Primary shopping channel per category in the future.

Retailers and consumer product companies should keep financial and health concerns in mind as they use new technologies to engage the consumer. Digital innovation can play a crucial role in improving performance by managing costs, keeping prices competitive, optimizing marketing and finding efficiencies. But the need to meet these daily business challenges should be balanced against a longer-term strategy that anticipates the opportunities continued technological change will create. 

Looking towards a future value proposition

As retailers look to the future, there are two fundamental differences in their operating environment that will impact tried and tested strategies.

The first is that the disruptive forces shaping the industry are no longer framed by distinct events, but are instead forming a constant backdrop that continually tests retailers’ resilience and agility. Retailers enjoyed a decade of relative economic stability between the financial crisis and the outbreak of COVID-19. Today, the impact of COVID-19 is being compounded by supply chain shocks, accelerating inflation, the war in Ukraine and wider geopolitical tensions. Together, these factors are collectively undermining the era of globalization and the relative prosperity that businesses have thrived in for decades.

Against this backdrop, the need for customer-centricity is not retreating, but accelerating as consumer expectations evolve, enabled by other factors such as increased transparency and choice, rapid technological shifts (especially in digital environments), mounting concerns and commitments around sustainability, and convergence between different sectors as retailers explore new ways to unlock value.

The second difference is the change taking place in the relationship that retail has with consumers, where the long-held principle of customer-centricity is likely to no longer be enough to confer loyalty. There have been challenges to fully embrace customer-centricity over the decades. Instead, retailers have used their focus on scale, scope and efficiency to drive a value proposition that puts other business needs first. It could be argued that retailers have grown for decades by making their customers do much of the work for them, by making them part of a process optimized around stores and the products retailers sell. Traveling to a store, trudging through aisles of stock, trawling through a vast range of products to get to what you want at a price you can’t negotiate, carrying them to the checkout, queuing to pay, scanning the items and taking the products home yourself hardly constitutes a customer-centric experience.

This is changing as consumers become more central in defining the activities of retailers. The internet has provided greater knowledge, choice and transparency. Online platforms have redefined expectations of choice and convenience by showing consumers what can be achieved. Immersive digital and physical spaces have created new approaches to experience. Smartphones and logistics platforms have exponentially improved the way consumers can access and receive products. Consumer values around social and environmental issues are increasingly shaping what they buy and whom they buy from.

Retailers are now in a landscape where the customer is truly king, and just delivering customer-centricity is no longer enough to confer loyalty or advocacy. Instead, retailers must find ways to integrate themselves into the everyday lives of their consumers by delivering tangible and intangible value. Success is now defined by the ability to build a trusted long-term relationship; the simple act of transactionally selling products will no longer be enough.

The three I’s that will shape future retail value propositions

The lessons that can shape the future of retail lie in three distinct areas. Collectively, these three I’s will shape the successful retail value propositions of the future by enabling them to differentiate their offering and provide tangible benefits and value back to the consumer:

• Invisibility — retailers can make consumers’ lives easier by providing them with the products they need when and where they need them, smoothly and seamlessly, making the transaction a process that they’re barely aware of.
• Indispensability — retailers can make consumer lives better by providing them with bundled products and services that can solve areas of holistic need using an ecosystem of partners that make the transaction part of a service to improve their lifestyles.
• Intimacy — retailers can make consumer lives more fulfilling by providing them with experiences that resonate with them, reflecting their core values, and making the transaction secondary to the services they provide.

Methodology

The eighth EY Future Consumer Survey Malta was carried out in May 2023 across a stratified random sample of 994 participants. The survey is conducted periodically to capture changes in consumption and consumer behaviour.