Next Gen Retail Vol. 6

In an era marked by rapid technological advancements and shifting consumer behaviours, retailers need to understand and adapt to evolving shopping habits and consumer preferences to survive and thrive in a competitive marketplace.

According to the latest KPMG Next Gen Retail Survey, Irish consumers are price-conscious but still expect good quality, customer satisfaction and sustainability considerations are also reshaping the retail experience; over three in five (61 percent) say they avoid brands that engage in shrinkflation (i.e., reducing the product size and either maintaining the price or increasing the price).

Price continues to be the primary driver when choosing where to shop. However, shoppers still value quality and strongly oppose brands that engage in shrinkflation or cost-cutting to the detriment of quality.

Keith Watt

Partner

KPMG in Ireland

Key findings

A focus on customer satisfaction

Two-thirds of Irish adults surveyed say retailers should focus more on customer satisfaction rather than solely on cost-cutting initiatives, and about 6 in 10 (58 percent) are more inclined to shop at retailers who prioritise quality over cost-cutting.

Half would pay more for products from brands prioritising quality over cost-cutting. In contrast, less than half (47 percent) believe retailers' cost-cutting measures negatively affect the overall shopping experience and the variety of products available.

Role of AI is still uncertain for consumers

Irish shoppers are uncertain about the role AI has to play and what it can offer for their shopper experience, with only 18 percent saying AI will improve their in-store experience. There are cost and quality decisions retailers need to be making now to sustain growth but they will also need to contend with the volume and pace of AI tech coming on-stream and how AI will enhance both efficiencies in business and their offering to consumers.

Over two-fifths (44 percent) feel they will have to trust how retailers are using AI to determine their shopping choices in the future, and only one-third (32 percent) think AI will transform how consumers purchase products and services, and over a quarter (27 percent) say AI will improve the online shopping experience for shoppers.

Irish consumers are still price sensitive

Most have adopted a variety of cost-cutting strategies in an effort to combat the rising cost of living. Almost two-thirds (64 percent) have been cutting back on luxuries or non-essentials and reducing energy at home (63 percent) due to increasing prices. Over half (58 percent) have reduced spending on socialising/entertainment and 53 percent are buying more own-label products.

Meanwhile, price (56 percent) and quality (19 percent) are the main drivers of choice for adults when choosing where to shop and over three-quarters (76 percent) of shoppers continue to be influenced by discounts when shopping.

Sustainability is key for brands

Over two-thirds (67 percent) now expect brands to make sustainable and circular products more accessible and affordable for consumers and offer incentives or discounts to customers for choosing eco-friendly or circular economy products. Nearly 6 in 10 (59 percent) feel brands should provide more information about their sustainability efforts, go beyond being sustainable, and take responsibility for reversing environmental damage.

More than half (55 percent) feel brands have a more active role to play in educating consumers on the environmental impact of their purchasing choices, and thirty-seven percent prefer to shop for brands who have adopted the three R's of sustainability - Repair, Reuse, and Repurpose.

Meanwhile, 3 in 10 are willing to pay a higher price for more sustainably produced goods, and only a quarter (26 percent) actively shop for brands participating in the Deposit Return Scheme.

Consumers are keen to see brands in Ireland be more vocal and proactive about sustainability.

Keith Watt

Partner

KPMG in Ireland

Our research found that 80 percent of 18-24-year-olds think brands should make sustainable and circular products more accessible and affordable for their customers. There is a real opportunity for brands and retailers to collaborate to understand and reward Irish consumers with incentives or discounts for choosing eco-friendly options.

Shopping habits and behaviours remain unchanged

There was little change over time in where consumers like to buy goods; the majority (87 percent) continue to buy groceries in-store, while less than a third (29 percent) buy clothes more online now than in-store.

Most (43 percent) still prefer to shop at large shopping centres, followed by 24 percent who prefer to shop locally, and city centres remain unchanged at 16 percent.

Cards and cash are favoured

Our survey reveals nearly 2 in 5 Irish adults (39 percent) use credit and debit cards as their most preferred method of payment, followed by 32 percent using cash, 16 percent using mobile payments like Apple/Android pay, and 1 in 10 Irish shoppers using Revolut or similar apps.

Attitudes to online shopping remain stable

Similar to 2023, over 55s are more likely to prefer physical stores so they can see and touch products before buying them. Over half (51 percent) still believe it is generally cheaper and easier to buy products online than in a store, and less than a third (31 percent) expect to buy products online more often over the coming 12 months.

Almost 7 in 10 (69 percent) like to read online product reviews from other customers before buying a product.

Download the full report

Next Gen Retail

Adapting to consumer preferences (PDF, 6.7MB)

Download

Get in touch

Do you have any queries about the findings of our KPMG Next Gen Retail survey, or the impacts for your business? Our team of seasoned industry specialists is here to empower your business with invaluable advice and solutions.

Contact Keith Watt of our Retail and Manufacturing team; we'd be delighted to hear from you.