As 2014 comes to an end, we look back at some of our key insights this year. 2014 was a year when the global economy strengthened but at a disappointing pace. Some of the world’s largest economies disappointed or even fell back into recession – including Brazil and Italy – but others, notably the UK and India, outperformed expectations. Consumers are expected to have spent US$43.7 trillion globally in 2014, 64% of which was on non-essentials such as leisure and recreation and communications. The number of households surpassed 2.0 billion for the first time and China overtook the USA to become the world’s largest economy in PPP terms.
The 2014 consumer was a paradoxical one. Interested in an even smarter smartphone at the same time as achieving a better work/life balance and loving brands that appeal to their ideals. For some, sugar became the new tobacco – a toxic health risk. We also saw increasing interest in wearable technology, the rise and rise of the phablet – which merges the functions of a smartphone and tablet – and increasingly blurred lines between e-commerce and physical retailing. A broadening of the trend for customisation and personalisation was also evident.
Here are some of the year’s highlights from our economic and consumer trends analysis:
- We kicked the year off with two of our most popular webinars – the Top 10 Consumer Trends for 2014 and our economic outlook for the year: The Global Economy in 2014: Old & New Challenges Converge. Dominant consumer trends under the spotlight in the former included the closing gap between first being interested in a product and actually buying it; eating right; eco-worriers and social conscience; and there’s an app for that. In the latter we discussed the strengthening economies in the developed world and concerns over those emerging markets with weak economic fundamentals.
- The move towards Omnichannel Retailing driven by consumer demands for convenience and value, the development by retailers of shopping apps and location-based offers, and the expansion of smartphone ownership and 4G networks has been a key theme this year.
- Frontier markets continued to attract investor interest from Angola, to Myanmar to Ethiopia and beyond. Knowledge – of the market, consumers, business environment partners and suppliers – is key to success in these lesser-known and frontier economies. Optimism abounds, but challenges are also apparent. Of course the first step to success is to choose wisely, as outlined in our white paper: Succeed in Emerging Markets: Selection, Strategy and First Steps.
- A detailed knowledge of income distribution continued to be crucial in 2014. We found that what constitutes a middle income in emerging markets differs dramatically from country-to-country. This matters because it affects overall purchasing power and within this the purchasing priorities of households. Similarly high-income earners in emerging economies are a diverse group and what constitutes a high income is radically different across countries. Understanding this can be a powerful tool in winning market share.
As 2014 draws to an end, our thoughts turn to the top consumer trends for 2015 and global economic prospects for the year. Consumer trends to be explored in 2015 include wired and well: connected health, Influencers and buying convenience. The global economy looks set to strengthen in 2015 but risks are not insignificant – including the spectre of deflation, geopolitical instability and the weak oil price. The US economy should be a key driver of global growth but other important markets are mired in difficulties including Japan and the eurozone.