Middle class consumers are an important target group for businesses, because they are the foundation and driver of consumer markets. This latest megatrend briefing Middle Class Retreat: Trading Up, Trading Down analyses key trends that relate to the Middle Class Retreat megatrend. It examines their impact on consumers’ behaviours and habits, as well as implications for brands, businesses and entire industries. Successful businesses will be those that are ready for the challenges and opportunities that this megatrend and its associated trends brings.
Middle classes struggle to maintain their economic status
Middle-class households in developed economies – those with a disposable income between 75% and 125% of the median – have not experienced any significant improvement in their standards of living since the 2008-2009 global financial crisis, as a result of weak or stagnant income growth and continued economic uncertainty.
The need to optimise their limited resources
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.
Value is not all about price
Middle-class shoppers’ purchasing decisions are driven by the pursuit of value. They are increasingly conditioned to buy on discount, as well as turning into keen deal hunters. However, value is not all about a ‘nice’ price, but is also related to ‘other factors’ including quality, consumer experience, convenience, authenticity and novelty. The key to success is for brands and marketers to uncover and compete on these ‘other factors’.
The accumulation of ‘stuff’ becomes less important
Giving less priority to the accumulation of ‘stuff’ helps the middle classes simplify their lives and free up resources to experience more and/or to indulge when they actually make a purchase. Instead of acquiring new things, middle-class consumers also increasingly embrace second-hand items and refurbished goods.
Potential to impact a wide range of industries
Trends pertaining to the Middle Class Retreat have the potential to impact, and even disrupt, a wide range of sectors and industries, as well as giving rise to new business concepts and models.
Megatrends reports provide insight into the eight megatrends we have identified as being the most important cross industry trends that business should be focused on during the next 10 to 15 years. Megatrend analysis helps companies understand the most important market trends that are expected to develop long term, enabling them to assess their future impact and proactively build relevant forward thinking strategy.