Consumer Behavior Is Changing Everything About How Supply Chains Must Operate

We explore five key consumer trends shaping global markets in 2025 and how they're transforming supply chains across industries.

• Sustainability is driving purchasing decisions with 78% of global consumers prioritizing eco-friendly products
• Products with sustainability claims grow 2.7x faster than conventional alternatives
• The secondhand apparel market is projected to reach $218 billion by 2026
• Digital transformation is redefining customer experiences with 71% of consumers expecting personalization
• Companies delivering personalized experiences see revenue gains of 40% or more
• The metaverse economy is projected to reach $800 billion by 2026
• Health and wellness has grown to a $4.4 trillion market extending beyond physical health
• 64% of consumers will pay premium prices for products promoting wellness
• Inflation has created a market split with 49% cutting non-essential spending while luxury goods boom
• Generational differences significantly impact spending patterns and market preferences
• Gen Z spends 3x more on digital goods compared to Baby Boomers
• Baby Boomers control over 50% of consumer healthcare spending

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Chapters

• 0:00 Episode Introduction
• 0:39 Sustainability Driving Purchase Decisions
• 2:30 Digital Transformation in Consumer Experiences
• 3:47 Health and Wellness Market Growth
• 4:41 Inflation's Impact on Spending Habits
• 6:11 Generational Values Shaping Markets
• 7:25 Conclusion and Business Implications

Transcript

Speaker 1: 0:00

Hello, tony Hines. Here You're listening to the Chain Reaction Podcast all about supply chain advantage. This is the Pulse all things impacting global supply chains this week. Stick around, stay tuned, stay informed. Thanks for dropping by.

Speaker 1: 0:20

Well, I always think if you want to understand supply chains, you need to understand how customers and consumers behave, and if you think about that, well, that's what I'm going to do right now to help you think about what's happening in 2025. We're going to take a look at consumer trends shaping the global economy. As the global economy evolves, consumer behavior continues to play a pivotal role in shaping industries and markets. Current trends not only reflect shifting societal values, but they also underscore the economic challenges and opportunities of our times In this particular segment. We're going to explore consumer trends backed by evidence and what the potential impacts might be.

Speaker 1: 1:06

Number one sustainability drives purchasing decisions. If you didn't know that already, that's the number one item on my list. Sustainability is no longer a niche concern. It's become mainstream. A growing number of consumers, particularly millennials and Gen Z, prioritize eco-friendly products and sustainable business practices. So what's the evidence for this? Well, here are two compelling pieces of evidence. According to a 2023 Nielsen study, 78% of global consumers say a sustainable lifestyle is important to them. Sales of products marketed as environmentally sustainable grew 2.7 times faster than products without sustainability claims over the past five years. That's according to a study by New York University's Stern Center for Sustainable Business. And if we think about the economic impact of that, industries such as packaging, renewable energy and second-hand markets are booming. The global second-hand apparel market, for example, is expected to reach $218 billion by 2026, driven by platforms like Depop and ThredUp.

Speaker 1: 2:24

The second thing on the list is digital transformation accelerating consumer experiences. Technology continues to redefine how consumers interact with brands, from the rise of AI-powered chatbots to immersive virtual experiences. In the metaverse, businesses are focusing on creating seamless, personalized customer journeys. Mckinsey reported that 71% of consumers now expect companies to deliver personalized interactions, and those that do are seeing revenue gains of 40% or more. The metaverse economy is projected to grow to US$800 billion by 2026, spurred by consumer interest in virtual shopping and digital goods and the economic impacts. Well, retailers and e-commerce platforms are investing heavily in tech adoption to cater for this demand. For instance, ikea's augmented reality app lets customers virtually place furniture in their homes, enhancing convenience and reducing return rates. Many other retailers use that kind of technology too, and you'll often see. Take a look what this would look like in your room.

Speaker 1: 3:43

The third thing is that health and wellness is more than a trend. Health and wellness become a core consideration for consumers, extending beyond physical health to include mental well-being and holistic lifestyles. The evidence the Global Wellness Institute reports the wellness market grew 4.4 trillion US dollars in 2022, with categories like mental wellness and fitness technology showing significant expansion. A 2023 Mintel report revealed that 64% of consumers are willing to pay a premium for products promoting health and wellness, and that trend continues. The economic impact of course, the fitness, nutrition and health tech industries are capitalizing on this trend. For instance, peloton's resurgence with innovative fitness programs highlights how brands are responding to consumer wellness demands.

Speaker 1: 4:37

The fourth factor inflation alters spending habits. Well, yeah, of course. Inflationary pressures have led consumers to reassess their spending, creating a divide between value-conscious behavior and indulgent splurges on premium products. Value-conscious behavior and indulgent splurges on premium products. The evidence A Deloitte survey in 2024 found that 49% of consumers are cutting back on non-essential spending, while 25% are trading down to cheaper brands. Conversely, premium and luxury goods have seen growth, with Bain Company predicting the global luxury market to hit 400 billion US dollars by 2025. So there's two ends of a spectrum. There aren't there of behaviour. On the one hand, people being cost-conscious, cutting back and controlling expenditure, while at the premium end of the market, people splurging and spending a lot more. And, of course, as the value of money falls, those big capital items that you've been delaying, you might decide to spend on because you want to pay for it now and get it done while it's a lower cost. So the economic impact is discount retailers and second-tier brands are thriving, but so are high-end brands like Louis Vuitton, which reported record sales in 2024. And there's a polarization reflecting the varied financial responses across consumer groups.

Speaker 1: 6:06

The fifth thing is generational values are shaping markets. Different generations are influencing consumer markets in unique ways. Gen Z and millennials are driving trends like digital consumption and sustainability, while the older generation are focusing on convenience and healthcare. Some evidence for this Pew Research highlights that Gen Z spends 9% of their income on digital goods, compared with just 3% by baby boomers. A 2023 report by AARP shows that baby boomers contribute over 50% of consumer spending in healthcare, emphasising their influence on this sector.

Speaker 1: 6:49

The one thing we should say when we look at some of these statistics you have to be very careful, because if we say Gen Z spending 9% of their income, that 9% of income might be much lower than the resource base of older age groups who have more capital. The economic impact brands are catering to specific generational needs and they're seeing success, for example, spotify with Gen Z playlists, or telehealth platforms for older adults. So, to conclude this short report on consumer spending trends understanding these consumer trends. It's essential for businesses looking to remain competitive In an ever-changing global economy. From sustainability to digital transformation, the behaviours driving the markets in 2025 reflect a balance between practical economic concerns and value-driven choices. Companies that can adapt to these priorities while staying innovative are likely to thrive in this dynamic landscape.