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Western European cities are gradually becoming melting pots. The foreign population in most European urban areas grew strongly during 2008-2013 and in 2013 at least every seventh inhabitant in the 10 most international European cities was a foreigner. For businesses in Western Europe, growing foreign populations imply that ethnic marketing is increasingly important to successful sales growth. For politicians, it means they need to take into account the voices of discontent local citizens that fear being outnumbered by foreign nationals.
Source: Euromonitor International
Geneva, Zurich and Oslo top the list in Europe when it comes to average disposable income. They are also the most attractive cities for foreigners, as Swiss cities have the highest share of foreign citizens in their population while Oslo’s share of foreign citizens is the fastest growing in Europe. Higher salaries, free work agreements with EU countries and lack of a local, highly-qualified labour force are among the primary reasons for the high rates of immigration in these cities.
Geneva, the headquarters for the UN and a vast number of other international organisations, is the most international city in Europe. In 2013, over 42% of Geneva’s inhabitants held a foreign passport, mostly Portuguese (19%), French (14%) and Italian (11%). Over one quarter of Zurich’s population was also foreign as of 2013. Holding the advantage of a shared language, Germans accounted for the largest share (23%) of foreigners in Zurich in 2013, followed by Italians and Portuguese.
Oslo is among those with the fastest-growing foreign population in Europe (8% CAGR rise over 2008-2013). The national structure of foreigners coming to Oslo is quite different from that of Swiss cities; however, a shortage of a local labour force and higher living standards remain the main motives. Polish (15% of all foreigners in 2013) and Swedish (14%) represent the most foreigners living in the city, while Filipinos and Lithuanians are other more pronounced minorities amongst a rather diverse mix of nationalities.
Given the heterogeneous ethnic minorities in Europe, targeting ethnic groups is still relatively rare in European cities in comparison to in the US (where Latin Americans constitute a single and mostly homogenous target market). However, the importance of ethnic marketing is set to grow in Europe as the myth of the “poor immigrant” is gradually dispelled and businesses realise the non-trivial purchasing power of ethnic groups.
The purchasing power of immigrant communities is evidenced by a growing number of researches. For example, Switzerland is experiencing a housing shortage, and, in 2013, Credit Suisse research claimed that international migrants absorbed 79% of new housing space built in Switzerland. Cross-border migrants in particular are fuelling demand for housing in Swiss key urban centres (eg Zurich and Geneva). Also in 2013, an OECD study found that an average immigrant contributes more to Norway’s budget in terms of taxes than an average citizen, implying high earnings’ level of immigrants. Foreign nationals even increased their average payments to the treasury during the economic downturn in 2008-2009, contrary to Norwegians.
Foreign populations in Western European cities are set to increase, in particular in those with the highest living standards and lowest unemployment. According to Statistics Norway, foreign-born population is expected to make up almost half of Oslo’s population by 2040, as the labour shortage remains and employers are eager to continue to attract foreign workers.
Given such forecasts of a continued increase in foreign populations in the most affluent European cities, calls to restrict immigration are growing louder. In February 2014, the Swiss voted in favour of setting up quotas for EU migrants. The result of the Swiss referendum was echoed by anti-immigrant politicians across Europe, including in the UK and Norway. It remains to be seen what the eventual shifts in immigration trends are once the immigration policies of European countries are revised. Meanwhile, such political tensions often act as a wake-up call for businesses to realise the substantial market size of local ethnic groups.