Asian consumers’ preferences are changing fast
The middle classes are expanding at breakneck speed. Some 5 billion people worldwide will earn a ‘middle income’ of at least USD10 a day by 2030, up from 1.8 billion in 2010, according to the Organisation for Economic Cooperation and Development.
This rapid rise in global living standards represents an opportunity for exporters. The challenge will be whether they can keep pace with consumers’ changing needs.
The middle classes are transforming as they grow. Take just three factors: people are living for longer; the number of women in employment is increasing rapidly; and many new consumers live in Asia – where long-term economic growth is forecast to outstrip the West. Businesses may need to re-examine their approach to win over these new consumers.
Think you know the typical older consumer, for example? Think again: there’s no such thing. With a rising pension age in many countries, people in their 60s increasingly have significant responsibilities: perhaps work, supporting children, looking after grandchildren or even caring for parents. Those in their 70s, meanwhile, enjoy better health and mobility than previous generations. Many want to travel, experience new cultures and learn new skills. These different stages of life create demand for different products and services. Companies that see older consumers as a uniform group may miss out.
When it comes to women, the risk is that businesses focus on the wrong area. Businesses that invest in marketing to entice female consumers – say, changing the colour of the product, or launching an advertising campaign targeted at women – may be perceived as patronising rather than empathetic. HSBC’s new Future of Consumer Demand report finds that women are, in fact, less likely than men to say that it is important to buy fashionable or reliable brands. Businesses may impress female consumers more if they simply invest in improving quality and price.
A strong online presence can also help. Women are still more likely than men to combine paid work with childcare and other family responsibilities. With greater pressures on their time, many value the convenience of home delivery.
Exporters will also need to readjust their expectations when it comes to sales in Asia. An entrenched stereotype says that emerging market consumers aspire to buy Western goods, especially luxury brands such as Scottish whisky and Italian cars. While it is true that foreign luxury brands continue to prosper in these markets, Asian consumers are increasingly willing to buy direct from retailers overseas and their tastes are changing fast.
In common with their Western counterparts, for example, some young and wealthy Chinese consumers now prioritise experiences. Rather than acquiring possessions, they want to travel to unusual locations, eat in new restaurants and watch foreign drama series on subscription channels – a change which may create more opportunities for service providers than it does for manufacturers.
So there are huge opportunities for business as the world’s middle classes grow. But to reap the rewards, exporters must forget what they think they know and look again at what tomorrow’s consumers truly want.