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Demographic Trends in Developed Cities – Who Is the Future Consumer?

January 26th, 2016

The demographic trends that characterise the developed world include shrinking family size and postponed marriage and child bearing age. This ultimately results in ageing and sometimes even decreasing populations in developed countries. At city level, the trends diverge, as some of them manage to compensate for demographic challenges better than the others. A quick look at 619 developed cities (including 350 in the US, 25 in Germany, 20 in Canada) suggests that the proportion of population aged 0-14 decreased in 520 of them. At the same time, some of them experienced rapid population growth, regardless of decreasing child populations.

Developed Cities by Change in Children and Total Populations: 2009-2014

Developed-Cities-by-Change-in-children-and-total-populations-2009-2014

Source: Euromonitor International

Classifying developed cities using their demographic trends

Perhaps surprisingly, the region that experienced the most apparent loss of children in developed cities during the review period was Asia Pacific. The metropolises of Taiwan, South Korea and Japan all had smaller populations of 0-14-year-olds in 2014 than they did in 2009. Other regions fared relatively better: 52% of developed cities recorded declining numbers of children in Eastern Europe, 45% in North America, 36% in Western Europe and just 12% in Australasia.

Nonetheless, the declining number of children did not always result in cities losing population. In fact, only 16% out of the world’s 619 developed metropolitan areas recorded a shrinking number of inhabitants over 2009-2014. Shrinking populations were mostly common in Japanese, some European and some smaller (under 500,000 inhabitants) US cities. In Japanese cities, this has been a result of some of the world’s lowest crude birth rates (at around eight births per 1,000 inhabitants in 2014). Contracting European and US cities, in turn, mostly feature crude birth rates above the developed world’s average (11 births per 1,000 inhabitants), but emigration has taken its toll on these cities and resulted in population loss during 2009-2014.

Meanwhile, other developed cities managed to compensate for the declining number of children with the sizeable immigration of working-age people. Among others, these include Asian and US megacities (Tokyo, Seoul, New York, Los Angeles, Chicago) as well as some major Western European cities (Hamburg, Vienna, Liverpool, Copenhagen). For example, over 2009-2014 Seoul dropped by 11% in terms of children under 15 years, yet grew by 4% in total population.

What do these demographic trends mean for business development?

Differences in demographic trends in developed cities imply different marketing strategies in corresponding cities. Direction of total population growth tells us about the overall prospects of market size growth in a particular city. Trends in child population provide an insight if consumer preferences are likely to shift to reflect solo consumer needs and wants.

Developed cities with a growing child population are the traditional markets for fmcg companies, as the increasing market size in these cities will drive sales of goods for family life, ranging from automobiles to shampoos. However, population growth combined with declining child population identifies the cities where the solo consumer is gaining an important role. Single-person households are partly responsible for the urban vibe of modern cities, as such consumers are more likely to eat out in restaurants, exercise in a gym, take art classes, attend public events and volunteer. Solo consumers are also the targets for such businesses as packaged food companies that offer ready meals or home furnishers with product ranges for small apartments.

Decreasing populations in some developed cities signal the most worrying places. Growth in real income might sustain the overall market size (as measured by total consumer spending) in these cities, yet consumption in volume terms for many consumer goods is likely to head downwards. While solo consumers emerge as the new consumer base with their own distinct lifestyle in many developed cities, decreasing total population indicates that some cities will certainly lack the solo consumers to compensate for decreasing numbers of families and child population.

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Ugne Saltenyte

Ugne Saltenyte is Macro Analysis Manager at Euromonitor International and focuses on developing analytical content and interactive tools to leverage macroeconomic data. Ugne holds a Master’s degree in Applied Macroeconomics from Vilnius University and has been involved in research and analysis since 2006. Over the years she has built her professional experience in market intelligence and business consulting services.

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