Changing demographics and consumer behaviours will present new opportunities to agile businesses in the coming decades whilst posing threats to some established marketing strategies, according to HSBC’s Future of Consumer Demand report
This new report reveals the changing face of consumer demand, driven by changing demographics, new technology and changing attitudes across the world. Recognising what will influence consumers in the future will become increasingly important for all businesses as consumer behaviours present new opportunities to agile businesses in the coming decades, whilst posing threats to some established marketing strategies.
With economic growth set to propel more than 90% of the world’s population into the so-called “consumer class” by 2020, HSBC’s Future of Consumer Demand report suggests companies should start preparing today to meet the wants and needs of tomorrow’s customer. Compiled by futures consultancy Trajectory, who drew from in-depth interviews with business leaders plus surveys spanning 90,000 consumers, the report discusses four major trends that will shape the way businesses go to market:
Noel Quinn, Chief Executive of HSBC Global Commercial Banking, said: “Businesses, wherever they are based in the world, need to be aware of how consumer tastes and expectations are changing so they can respond positively. The status quo won’t last, so now is the time for companies to show customers and investors alike that they are alert, innovative and imaginative.”
Middle income consumers, defined as those earning USD10-20 per day (i) - currently account for one in seven of the global population. By 2020 this is forecast to grow to 3.2bn, rising to 4.9bn a decade later (ii). In these numbers their discretionary spending power will have a significant impact on company strategies, in particular for Asia where the majority will live. Businesses shifting emphasis to these consumers will need to consider the influence that cultural differences make on their buying preferences.
Rapid growth in the number of people who are online, especially those with the mobile devices, means shoppers are enjoying greater choice, wider networks and the ability to be more discerning than ever before. By 2020 some 6.1 billion people (iii) will use a smartphone. Members of Generation Z, born between the mid-1990s and the mid-2000s, have grown up as ‘native’ users of digital technologies and their expectations for simplicity and accessibility have been be shaped accordingly.
The economic power of women is increasing significantly around the world, with their earnings set to rise to USD18trn by 2018 from USD12trn in 2010 (iv). Businesses wanting to target this segment need to adopt an approach that reflects women’s increasingly work-oriented lifestyles. Surveys show men and women demonstrate similar attitudes and values - they want to buy from trusted and reliable brands (70% vs 68%) and they put equal importance (91%) on leisure (v). Moreover, over two thirds (67%) (vi) of both genders are interested in consuming ethically, indicating that sustainable practices will increasingly influence purchasing choices.
The report also explores the economic importance of different generations, from Pre War and Baby Boomers to Generation Z. It finds that the purchasing power of the over-60s will keep rising, and that by 2020 this age group will outnumber the under-5s for the first time in human history (vii). Millennials may be less satisfied with their financial situation, but they are now approaching their prime working years and demonstrate relatively distinctive behaviours such as the prioritisation of experiences over possessions.
(i) World Trade Organisation data
(ii) As above
(iii) Ericsson Mobility Report 2015
(iv) Ernst & Young: ‘Women – the next emerging market’ (2013)
(v) Trajectory Global Foresight Survey
(vi) As above
(vii) United States Census Bureau – An Aging World: 2015 International Population Reports