Africa Sustainable Finance Intensive

Designing gender smart sustainable finance instruments and funds

Author:

Maseabi Marageni

Futuregrowth Asset Management

Contributors:

Maseabi Marageni

Futuregrowth Asset Management

November 23, 2021
3 minute read

Wealth managers have an opportunity to build trust with this vital client group, especially during times of increased market instability.

In brief
  • Consumer confidence remains low as the cost-of-living bites, with more than two-thirds fearing the worst is yet to come.
  • Affordability is now important across all income brackets — though the K-shaped consumer persists.
  • While less important than price, sustainability and a focus on health and wellness continue to drive demand, alongside a continued shift to private label.

Just over a year ago, the EY Future Consumer Index March 2023 showed that “a holiday, haircut and a day out” topped the wish list of UK consumers as their long-term confidence to spend following the COVID-19 pandemic had returned. But today, they are more likely to be trimming their spending and opting for overtime.

Their confidence and ability to spend has all but disappeared as price rises and the UK cost-of-living crisis has hit their pockets. Meanwhile, their ideals around sustainability have been hindered by their ability to afford a greener lifestyle, although expectations around sustainable consumption remain. In this extremely price-sensitive environment, brands and retailers need to work harder than ever to understand the factors influencing the UK consumer. Retailers need to re-evaluate ranges and pricing to better meet the needs of the K-shaped consumer which first emerged in the EY Future Consumer Index July 20222– a term which marks two extremes in spending patterns between the cash-strapped and those willing to spend. With 38% of UK consumers being concerned with their finances, there is a mandate for retailers to simplify product portfolios to reduce the proliferation of choice and to make the shopping experience easier. Meanwhile, those targeting consumers’ green ambitions also need to rethink how to make their sustainability ideals a more affordable reality. There are consumer demands that offer other opportunities for brands and retailers; enhancing wellness offers for the health-conscious consumer or the use of technology that further aids the consumer in their buying experience, for example.

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