There is more to consider than Gen Z. Powerful demographic forces are reshaping consumer behavior and causing large shifts in consumption patterns in Asia.
Asia is now the world’s consumption growth engine and is likely to reinforce that position over the next 10 yrs.
Disregarding Asia’s consumer markets would mean missing at least 50% the global consumption story.
Asia’s consumer markets are not only a story of scale, but also 1 of diversity and shifting preferences and behavior caused by powerful demographic, social, and economic forces.
To thrive in these markets, businesses and investors will need to get to know and learn how to serve distinct types of consumers, including Japanese Instagrannies, Indonesian Generation Z gamers, Indian small shop owners, and Chinese lifestyle-indulging millennials, to name a few.
Asian consumers are offering a $10-T opportunity.
Globally, 1 of every 2 upper-middle-income and above households is expected to be in Asia, and 1 of every 2 transactions to be made by consumers in the region.
Strong prospects for consumption in the region reflect falling rates of poverty and rising incomes and spending power. The number of households below the middle class with limited discretionary consumption power is expected to fall by 60%.
Across Asia, the average size of households is shrinking.
33% of households in advanced Asia and more than 15% of households in China are already single-person ones. In India and frontier Asia, average household size has declined by about 15% over the past 20 yrs.
The smaller household size has implications for businesses serving Asian consumer markets.
For instance: there could be an expanding opportunity in catering to the “lonely economy” and the need for new forms of companionship.
One trend that has already resulted from individuals living alone is that ownership of pets is soaring across Asia.
The type of products and services experiencing rising demand could include smaller portions in packaged food, food delivery at home, and may even lead to shifts in urbanization patterns as demand for more single-unit housing increases.
This demographic shift is propelling growth in certain leisure categories, with demand rising for digital entertainment, solo dining, and solo travel.
The “self-care” market is growing strongly as consumers increasingly focus on mental health and healthy lifestyle choices.
Seniors: defined as individuals over 60 anni, are expected to drive 67% of growth in advanced Asia and 33% of consumption growth for the entire region.
Companies recognize and understand the aging of the region, but the nature of senior consumption is changing. Most notably, the older generation is increasingly happy to consume online, a new phenom.
This shift calls for businesses to reassess how they serve these consumers. Companies likely will need to adjust their online presence and reconsider the size of their current physical footprint.
Another important nuance that companies need to assess is the enormous variation in the purchasing power of Asian seniors. Around 70-M seniors, mostly in advanced Asia and parts of China have relatively high incomes and will drive consumption growth in categories such as health, housing, including specialized assisted-living facilities, and leisure.
Digital natives: those born between Ys 1980 and 2012, including members of Generation Z and millennials are expected to drive Asia’s consumption over the coming decade.
They account for over 33% of Asia’s population consumption. Research on Generation Z in Asia found that 20 – 30% of this generation spends more than 6 hrs a day on their mobile phones, voraciously consuming video content. They are eager for new experiences and 2X as likely to buy brands that set them apart than Generation X. More than 70% of them are very confident of meeting their financial goals.
Driven by such optimism many are expanding their consumption, enabled by easy access to digital platforms and borrowing. A continuation of increased spending by digital natives will depend on whether they can pay for debt with rising incomes, and whether credit remains available.
Asian brands on the rise.
Asian consumers’ preferred brands are changing in some categories. In consumer packaged goods, local players still account for more than 60% of sales of the market.
Asian regional players have grown 3% faster than the market over the past 5 yrs. Similarly, local and regional brands account for the majority of sales in automotive and consumer electronics. Given this, businesses serving Asian consumer markets need to focus on local tastes and tailor their offerings accordingly.
Asian consumers are some of the most demanding in terms of personalization, and are willing to share their data to achieve it.
As companies seek to tap into this demand, they will need to consider both the digital and physical worlds.
In the 1st, personalization is already gaining traction; consumers increasingly expect every aspect of their digital journey to be personalized, including interactions, communications, and offers.
In the 2nd, personalization is less prevalent, and coexists with other trends in consumer preferences such as limited editions of some goods. However, some innovative companies are creating unique customer journeys.
Companies that find the right approach to personalization are likely to reap significant rewards, including improved engagement, sales, and profitability.
Consumers across Asia are changing most parts of their lives.
Companies serving these markets will need to understand these consumers and adjust their business models.
The Big Q: What companies will be the rising stars of the next decade, and what new strategies and capabilities will best enable them to adapt to the changing Asian consumer landscape and capture the next decade of growth opportunities?
We are following this trend closely, stay tuned…
Have a healthy day, Keep the Faith!