Monitoring and Adapting to Demographic Changes
Recent population changes, such as urbanisation, migration, ageing, shrinking labour force and growing health risks are enormous factors that are shaping consumer markets and economies around the world. This highlights the need for companies to monitor demographic trends and understand major demographic shifts that would impact their business today and tomorrow.
Understanding information about these population changes can help businesses not only build detailed consumer profiles but also help them to project and strategise for future demographic shifts.
Diversity creates new business opportunities
Rising migration is making consumer markets increasingly globalised and interconnected. While these changes can result in challenges, they will create new opportunities for businesses, since immigrants often have demand for products and services that meet their specific needs. Industries such as food, travel, financial services and beauty and personal care are among sectors that have experienced new consumer opportunities emerging as a result of increased migration.
Source: Euromonitor International from national statistics/UN Note: Data for 2030 are forecasts.
Net migration to Germany, for example, has increased significantly since 2015 as the country accepted a large number of refugees from Syria. Migration from other countries also continues to rise. Foreign citizens now account for more than 10% of Germany’s population, with a significant share of them having Muslim as their religion. The Istanbul-based Islamic bank Kuveyt Türk Participation has tapped into the growing market of the Muslim community in Germany and Europe by opening a subsidiary in Frankfurt in 2015. It is the first bank in Germany and the Eurozone which introduced comprehensive financial products and services according to the Islamic banking principles (Sharia law).
Growing health problems drive lifestyles changes
Caused mainly by dietary changes and a lack of physical activity, “lifestyles” diseases such as diabetes and obesity are on the rise, particularly in developing countries which experience fast urbanisation and growing living standards. The obesity rate in developing countries rose from 8.7% of total population in 2010 to 11.2% in 2017.
To combat significant health risks, consumers have embraced health and wellbeing trends. Many have started to change their eating habits, reducing fat and sugar consumption. While this trend can pose a challenge to the food industry, it also creates new business opportunities and drives product innovations. Facing global consumers’ growing concerns about sugar consumption, Nestlé is developing a revolutionary method to change sugar structure, which can help cut the sugar content of its confectionery products by as much as 40%.
Shrinking working-age population requires businesses to adapt
Due to higher living standards, lower birth rates and population ageing, the working-age population (population aged between 15-64) is starting to shrink in some of the world’s leading emerging markets, including China, Russia and South Korea. Where China once had massive amounts of excess labour, the country today faces the prospect of a rapidly-shrinking labour force as its working-age population is forecast to decline by 35.7 million people during the 2018-2030 period, the largest decline in the world.
A shrinking workforce will have wide-ranging impacts on the economy, pension system, labour market, industry and consumption. It is vital for businesses to adapt to the changing operating environment. For instance, the US carmaker Ford has started to implement automation in its factories in China to cope with future labour shortage. In its newest facility in Hangzhou, Ford houses at least 650 robots which perform part of the assembly tasks that previously would have been done by hand.
Euromonitor’s database helps identify key changes in demography. For additional insights on Population, download ‘Why Population Insights Matter to Business Strategy’.