How Digitalised Millennials Differ in Developed and Emerging Markets

Millennials (also known as Generation Z, the population group born between the 1980s and 2000s) have become the driving force behind the global digital landscape, due to their tech-friendliness and openness to the Internet. However, while on a global level this key consumer group holds more overlapping values and characteristics across cultures than any before them, there are key differentials between digitalised Millennials located in developing and developed countries. These contrasts primarily centre on the diverse consumer relationships with digital brands, the varying premium placed on “value-for-money” and “luxury” telecoms goods and services, and the levels of trust placed in online transactions in segments such as the sharing economy.

Luxury Electronic Goods Retail Market and Internet Penetration in Selected Regions: 2015-2019


Source: Euromonitor International from trade sources/national statistics/International Telecommunications Union/OECD

Note:  Figures are in constant US$ terms and forecast

The frugality-inducing impact of the global economic downturn of 2008-2009 and a more scrutinising attitude towards brands have led Millennials in developed economies to a new form of consumption. These twenty- and thirty-somethings have moved beyond the phase of traditional ownership and are looking to the value and source of a product when making a purchasing decision.

In part, this is down to the much greater level of Internet penetration in advanced economies (at almost 80.0% of the population in 2014, neatly triple the rate in developing countries), which allow the mainstream presence of online consumer advocacy groups, price-comparison platforms and brand investigative sites.

It is these factors that have seen the success of the sharing economy for example, where Western Millennials are happy to rent products (cars, apartments, clothes) temporarily. Lightweight living is in trend among this demographic, which increasingly has less respect for established brands.

Emerging Millennials place a premium on exclusivity and luxury

Developing-market Millennials value different dynamics. They are much wealthier than their parents and grandparents were, due to the rapid income increases in contemporary emerging economies, and are therefore driven by the urge to have what previous generations did not.

As a result, they are more concerned with the actual ownership of goods, in particular if they are aspirational items. Whereas a Millennial in the West is less likely to spend their entire wages on an expensive tech product, emerging-market Millennials chase this status and are willing to save up significantly to purchase the latest iPhone or another genuinely branded product. Unsurprisingly, according to a 2014 report by consultancy McKinsey and Co, the world’s 15 fastest-growing emerging markets will provide 90% of the growth in the consumption of luxury fashion goods over the following 10 years, many bought online. Furthermore, over 2015-2019, the market for luxury electronic gadgets is set to expand by over 21.0% in real terms in the Asia Pacific region, compared to around 15.0% in Western Europe.

Although urban Millennials in markets such as China and Brazil are beginning to mimic their developed counterparts to some degree, their environment is not as digitally progressive or transparent. The sharing economy, for example, has struggled to take off in developing countries because consumers still do not trust each other entirely and do not yet have openness to digital peer-to-peer transactions. Established brands in segments such as hotel and catering, travel and technology continue to have a strong pull on consumers.

Will the two worlds converge in the following generations?

There remains a significant digital divide between developed and developing countries, which continues to shape the contrasting approaches to technology and the Internet. By 2030, still less than half of the developing world population will be online. The Millennials, however, is just the first generation that can claim relative global homogeny in digital consumption patterns (platforms such as the App Store, eBay and Google search are popular among both developed and developing Generation-Y consumers). The following generations, who will be Internet natives to an even greater extent, are likely to follow trends dictated by the disruptive innovations online regardless of their actual locale.

Furthermore, the consumption model of “popular in the West, becomes popular for the rest” is generally true across most digital segments. Developing markets do eventually embrace developed world habits, although the gap between marginal and mainstream may take years to bridge.