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April 18, 2012

Top 10 Consumer Trends for 2012: Emerging Market Shoppers

213632_8457_woman_small_scxThis piece is the fourth in a weekly series of consumer comments exploring each of the trends Euromonitor International identified in the recent Top 10 Consumer Trends for 2012 article.

According to Christina Ko, blogging at HK Fashion Geek, the Asian love of the luxury bag has become “...a cultural fact. In the same way that Asians prefer rice to potatoes, they also prefer luxury handbags to non-branded ones,” she says. Click to tweet! An appetite for luxury is extending beyond China's nouveau riche as ever more white-collar workers are demonstrating an enthusiasm for it. In 2012, throngs of emerging market shoppers around the world are aspiring to more consumption. They are now enjoying malls and chain stores and learning to rely on credit while those with wealth are blending shopping with tourism as they spread their consumption wings.

Real Annual Disposable Income in BRIC Countries: 2010-2015

ScreenHunter_02 Apr. 18 10.17
Source: Euromonitor International from national statistics

Note: Annual disposable income expressed in Constant 2011 prices (Fixed 2011 Exchange Rate); Data for 2012-2015 are forecast

Movin' up

Apple products like the iPhone are in huge demand in China, and are seen as a badge of wealth. In India, upscale spas are seeing more men seeking to relieve stress and rejuvenate. According to Euromonitor International forecasts, real growth of retail sales of men's grooming products in India will be almost 12% in 2012. Click to tweet! Meanwhile, there are now at least two organic bakeries for dogs in Mumbai.

In Russia, consumers are discovering their taste at home for fresh and varied baked goods they may have sampled abroad, according to Modern Bakery-Moscow. While overall cigar consumption is falling, in South Africa luxury cigars have become fashionable. Young Johannesburg entrepreneur Sizwe Ncapayi mainly smokes cigars “You are not smoking as much as making yourself big, advertising yourself," he says.

Product quality and pricing were the main features Brazilian consumers looked for until very recently when buying clothing, but now “aspirational shopping” and the “search for exclusive designs” have become additional factors, according to website Mondo do Marketing. Rising consumer confidence in e-commerce is boosting sales. According to Euromonitor International data, the real value of internet retailing in Brazil rose by 110% between 2006-2011. Click to tweet!

Euromonitor International's 2011 Annual Study found that spending on new technology increased most in the developing markets surveyed (Brazil, China, and India), reflecting rising incomes and a possible desire by the new middle and upper classes to flaunt their newfound wealth by purchasing the latest gadgets. Indeed, 36% of Indian respondents intended to spend more on new technology over the next 12 months. Click to tweet!

Respondents Planning to Increase Spending on Clothing and Footwear, New Technology in the Next 12 Months: Brazil, China, India and the average of all 8 countries surveyed

ScreenHunter_03 Apr. 18 10.18
Source: Euromonitor International Annual Study 2011

Malls go mainstream

Some of the world's largest shopping malls are now to be found in Asia, with China's South China Mall and Jun Yuan Mall having gross leasable areas of more than half a million square metres. Giant shopping centres are mushrooming all over Africa and the Middle East. Shopping centres are now also attractive to the less well-off. In Soweto, South Africa's best-known township, at least six malls have opened since 2005. MD of Nakumatt, one of Kenya's leading retail chains told the Financial Times, “People want to be seen in shopping malls; it's aspirational.”

Convenience has become important for the growing number of time-stripped middle class consumers. One consumer from Kamala, Uganda, commented on the BBC that bargaining has dropped since it is only possible for those with time on their hands. “The growth of dual-income families is making eating out a necessity, rather than a luxury. Restaurants are catering to all budgets," said Indian food critic Rashmi Uday Singh.

Shopping is tourism and leisure

Retail therapy is popular among emerging market consumers as they buy luxury items around the world. Buying overseas adds prestige. “Walking into the Ermenegildo Zegna store in Milan is a multicultural experience” writes Rachel Sanderson in the FT in late February 2012. “Shop assistants are speaking Chinese and Portuguese to customers from Asia and Brazil as they pass through Italy's fashion capital.”

Plastic spending and financial services

Many emerging market spenders are becoming more comfortable with credit and store cards. The number of credit cards in Brazil, for instance, increased by nearly 8% between 2010 and 2011. Click to tweet! Store cards appeal to lower income consumers with low access to banking services.

Credit is bridging a widening gap between income and consumption. “My wage went up 50% in only two years. Why should I think it won't keep growing?” says Belinda Iglesias, a 37-year-old mother of two who works in a shopping centre in São Paulo. She says that she is “very optimistic” regarding her future and that is why she has bought a motorbike for her daily commute, as well as a new fridge and washing machine. Consumers like Belinda are sensing the potential of economic growth and seizing the chance to acquire goods they never had before.

Brazil's strong economic expansion is bolstering the purchasing power of its poorest consumers who are now accessing postal, telephone and banking services. Bank Santander Río has opened a dozen new branches in slum areas while telecom provider TIM is planning to offer high-speed internet access in Rocinha, a Rio favela.

Euromonitor International's Annual Study 2011 confirms that credit card use is expanding in the developing countries surveyed. 20% of Indian respondents expected to increase credit card use to manage shortfalls or for luxuries over the next 12 months. Click to tweet!

Counterfeits and rented luxury feted

Counterfeit items continue to appeal to emerging market consumers as they bring trend-led consumption lifestyles and variety within reach. This underlies new rental offers too. Following a global trend towards the renting of high fashion, Caracas Rent a Dress has opened in the Venezuelan capital.

The thirst for fashion alongside price sensitivity is fuelling a thriving trade in knock-off clothing copying international high street brand pieces for Indonesian fashionistas. An unnamed 20-year-old owner of an online clothing store selling knock-off clothing told the Jakarta Post: “We call them 'replicas' instead of counterfeits.”

Wasif Kabli, of the Commercial Committee of the Jeddah Chamber of Commerce and Industry has been airing controversial views on imitation goods. In an interview with the Al-Hayat newspaper, he argued that “If the commodity conforms to Saudi and international specifications, I don't mind if it's sold on the Saudi market, even if it is fake. Because not all Saudis can purchase a handbag made by an internationally-known manufacturer which costs SAR15,000 (US$4,000)”. He maintains that the country's majority of working class citizens require the market to be accommodating and allow them to feel they are “equal with the rich”. A respondent to the January 2012 Euromonitor International Quick Pulse Survey from the MENA region, meanwhile, points out that: “Buying a good replica is a good option especially handbags and shoes. I make sure it is not a very low price cheap copy. There are grades of quality of replicas”.

In recent weeks, queues of gadget fans in China have been lining up to buy the Meizu MX, a more affordable iPhone lookalike. University student Kenny Tang, who bought the phone just before the Lunar New Year, said: “It looks like the iPhone, but the software is completely different, not to mention better.” While such manufacturers used to be called “shanzhai” firms - a Chinese term for manufacturers known for “knock-offs” - they are now moving to market their own brands.

Look out for the fifth in the series: Top 10 Consumer Trends for 2012: Green Thrift

About Euromonitor International's Annual Study, Global Youth Survey and Quick Pulse Surveys

Euromonitor International's Annual Study surveyed 16,000 consumers of all ages (15-65+) in eight mature and developing markets in July and August 2011, questioning respondents on the following themes: health and wellness, food and drink, technology, shopping and leisure, personal traits and values.

Euromonitor International's Global Youth Survey reached out to young consumers living in 15 countries with the largest and fastest-growing youth populations. Fielded August-September 2011, the survey questioned 16-24 year olds on the following themes: financial expenditure, food and drink, technology, leisure activities, personal traits and values.

In Quick Pulse surveys, Passport Survey reaches out to Euromonitor's network of in-country analysts and in-house researchers around the world in order to find out more about current consumer attitudes and habits on a wide variety of topics, from economic outlook to daily activities.

Note: Euromonitor surveys are online surveys; all respondents are drawn from the online population in any given country, not its population as a whole. This means that in emerging markets, respondents tend to be more educated, affluent and urban.

 


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