2014 was another tumultuous year for the global economy. Although on a global level economic growth strengthened, some of the world’s largest economies disappointed or even fell back into recession – including Brazil and Italy. Consumer expenditure looks to have reached US$43.7 trillion in the year, 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.
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In 2014, consumers epitomise contradictions. A desire for everyone to indulge in luxury and instant gratification expressed by the need for an even smarter smartphone, a passion for apps, a faster route to purchase and a real craving for the visual. However, in parallel, are the struggle for better work/life balance, the concerns of eco-worriers, an appreciation of frugality and imperfection, and a longing for the authenticity of home and community. Other dominant consumer trends include the importance of eating right, the ‘people’s choice’ ruling the online world and a set of adaptive post-recession consumer coping strategies that have become the new normal for many.
Driven by the rising interconnectivity of digital devices and access to fast broadband, the Internet of Things (IoT) has the potential to transform traditional relationships between consumers and their environment. In essence, IoT signifies the capability to connect everyday devices and appliances, such as fridges, toothbrushes, thermostats and watches, to web-based networks. This integration opens up a number of new segments, ranging from data-analysis instruments for both businesses and consumers, to small-screen advertising, digital device updates and a variety of communications add-ons. However, IoT is only at present applicable to advanced markets, which have strong IT infrastructure, while infringements to consumer privacy are also a potential concern.
TV continues to dominate the ad market in most emerging market economies (EMEs), as it helps businesses reach the majority of consumers in these markets. Growth in TV adspend has been strong in Asian Pacific and Latin American EMEs, while it is set to decline in emerging Eastern European countries where TV possession rates have reached saturation point. TV adspend in EMEs will, however, face competition from the online segment, as Internet usage soars and consumers spend more time online.
Emerging market economies (EMEs) have witnessed diverse changes in their political stability since 2010, with important implications for business environments and economic growth. While persistent and rising political turmoil has undermined investor and consumer confidence in countries such as Egypt and Ukraine, economies like Indonesia and Chile have seen growing capital inflows as a result of improvements in political stability and their business environments.
There are few segments that can still offer the creative opportunities like the wearable tech market. Though attracting much hype over the past year, wearable smart technologies are yet to become necessary accessories even among wealthy developed-market consumers. Design flaws, cost concerns and narrow niches have held back the segment from entering the mainstream market, despite the recent rapid success of other telecom-focused products such as music players, smartphones and tablets. However, the lack of a clear brand leader and a product yet to capture the public’s imagination offers opportunities to capture what can potentially become a giant global market for wearable tech.
A comparison of all consumer markets in terms of their expected consumer expenditure annual real growth in 2014 reveals some interesting fast-growing markets that are not among the usual major emerging markets (such as the BRICS and the MINT). Of the top five fastest growing consumer markets of 2014, Malawi and Sierra Leone are somewhat surprising entrants while Turkmenistan and Saudi Arabia are fast-growing markets with sound fundamentals that can offer significant opportunities for consumer goods companies. Mongolia is also a market with promising prospects, but its small population restricts meaningful market expansion.
This Christmas, consumers in different parts of the Asia-Pacific region are not sharing the same level of optimism. While some are likely to spend big on properties and online shopping, there are many who are facing the reality of an economy that is losing steam.
Looking at the world’s 25 largest emerging markets, ranked by GDP in PPP terms, the five fastest-growing include some usual suspects (China and India) but also some more surprising entrants – particularly Nigeria and Bangladesh. 2014 should see relatively strong growth for these five economies – albeit in some cases weaker growth than in recent years – but as ever, all face important challenges.
Euromonitor International has identified the top three digital consumption trends for 2014. Internet users will consume more video-based media online as offerings expand and enter the mainstream; consumer trends such as showrooming and sofa shopping will see e-commerce activities migrate to smartphones; and the usage of new social media and rapidly expanding mobile messaging services will appeal to younger consumers. The continued expansion of home broadband services, especially into rural areas still underserved by infrastructure, and the establishment of 4G LTE as a mainstream mobile data service will increase speeds for consumers and thereby facilitate greater consumption of digital goods and services in general in 2014.
2014 should see Asia-Pacific become the world’s fastest-growing region for the 10th consecutive year. In this time, the region’s economy has increased by 73%. China alone has added US$5,705 billion (in 2013 prices) to its GDP – equivalent to another Japan – and the region’s population has expanded by 10.4%. Today, more than one in every two people in the world lives in Asia-Pacific.