Middle-class consumers are an important target group for businesses because they are the foundation and driver of consumer markets.
The ‘Middle-Class Retreat’ megatrend asserts that while middle classes are booming in Asia, the middle classes in developed markets are struggling to maintain the economic position they enjoyed for the last half a century. Middle-class households in developed countries have not seen any significant improvement in their standards of living since the 2008-2009 financial crisis, as a result of weak or stagnant income growth and continued economic uncertainty.
It is important for brands and businesses to understand the impact of this megatrend on their consumers’ behaviours and habits, and the potential impact on an entire industry in order to be successful.
Value is not all about price
The middle classes are moving away from conspicuous consumption, as they focus on obtaining the most value for money and optimising their limited resources. Key trends pertaining to the ‘Middle-Class Retreat’ megatrend are therefore rooted in the reassessment of values, ownership and priorities.
Middle-class shoppers are driven by the pursuit of value, increasingly conditioned to buy on discount, as well as turning into keen deal hunters. However, value is not all about price. Middle-class shoppers are also looking for other factions such as quality, customer experience, convenience, authenticity and novelty. The key to success for brands and marketers is to uncover and compete on these other factors.
One aspect of this megatrend is the idea of ‘glorified frugality’, which sees the middle-class consumer celebrating how little something costs, rather than how much, whilst also reducing waste.
This is exemplified by the growth of discounters in grocery retailing. Since 2010 and the aftermath of the global financial crisis, discounters have seen their sales growth outpace that of hypermarkets. Meanwhile, hypermarkets have underperformed the grocery market performance since 2013, as consumers switch to more frequent shopping trips and demand smaller stores in more convenient locations.
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