Top 10 Economies and Consumers Articles of 2015
2015 was a year when the global economy strengthened but (once more) at a disappointing pace. Divergence was a key word: the UK and the USA have been experiencing the strongest growth of the world’s major developed economies, whereas Japan and Italy continue to disappoint. The Indian economy outpaced China and Russia and Brazil became mired in recession. The 2015 consumer continued to spend cautiously with expenditure increasing by just 2.2% over 2014 to reach an estimated US$41,361 billion. Community rose in importance for many, with retailers working to tap into this trend. With 2.9 billion internet users globally, omnichannel retailing also met the needs of consumers who see their “real” and “digital” lives converging.
Read the most popular articles on Economies and Consumers in 2015:
Consumption in 2015 is increasingly being driven by the heart, with consumers making choices defined by their positive impact on the world and their community such as cause-linked buying, the thriving ‘sharing economy’ or a more ‘can-do’ attitude that Millennials have in common. Malls are reinventing themselves as community hubs rather than the commercial antithesis of it. Health, tracked digitally, is often benchmarked against the progress of significant others and rising, chatty vlogger stars are appealing to millions through their relatable stories. Individualism prevails in the heightened consumer desire to safeguard privacy, and still this conversation is shared and debated. Consumers are also favouring greater convenience, for which they are increasingly prepared to pay. Brands cater to the trend through sharper online and offline shopping combinations and neighbourhood buying options. More broadly, the blending of online and ‘real world’ lifestyles is moving into a new, more unified phase.
Since 2008, key multinationals have depended on emerging markets for growth – 90% of Unilever’s global growth during 2008-2014, for example, came from emerging markets. Procter & Gamble, an even better example, did not grow in developed countries at all during the same period, and it’s only growth came from emerging countries. Now that the growth prospects of the key emerging markets have worsened, exposure to emerging countries is turning into a potential risk, and using information from the Euromonitor International’s Competitor Analytics we can review how exposed key companies are.
The rise of the middle class in emerging markets has captured the enthusiasm of global businesses, especially in the context of weak demand growth from developed economies. In targeting emerging middle class consumers, the most successful companies are those which can fully assess the middle class potential in prospective markets. For the long-term period through to 2030, Euromonitor International has identified five emerging markets with the best middleclass potential, which are China, India, Indonesia, Nigeria, and the Philippines. In these countries, the middle class is set to become a prominent consumer force thanks not only to their large size, but also their strong income growth prospects and a median income exceeding US$10,000 (in constant 2014 prices) per household in 2030.
With e-commerce use accelerating on the back of improved Internet penetration in emerging markets, it is important to recognise the specificities of local consumers and how they approach online shopping. Unlike in most advanced economies, both the choice and range of goods on offer by web retailers in developing markets are limited, which is driving demand for global shipping and cross-border commerce. Mobile retail is far more popular in emerging markets, since for many the web-enabled mobile handset is often the only point of Internet access. Providing an expansive range of payment options is also key to reaching a wider audience, since most emerging nations are significantly underbanked.
In today’s all-consuming world of digitalisation, teenage trends move rapidly and unpredictably. As early adopters, teens can be the difference between success and failure for telecom goods and services. One example of teens as influencers is the surge of online gaming video platforms such as Twitch, which have become epicentres of teen-driven web traffic. Teens are also moving away from traditional social media and becoming more active on mobile-based, image-focused platforms such as Instagram, which are more suitable to teen lifestyles. However, teens are not always major influencers in consumer-facing technologies, with this demographic having been largely ignored by the wearable tech segment.
It has been six years since the financial crisis that brought the world economy to a standstill. Soon afterwards, policy makers and analysts began to outline the main features of the recovery. Virtually all these observers agreed that by 2015 the global economy would be back on track and growing robustly. As the world is poised to enter 2015, the world economy is strengthening but risks remain notable, while Euromonitor’s forecasts leave no doubt that a rebound is taking longer than expected.
Latin America is a key emerging region for global economic growth, accounting for 7.8% of total global GDP in 2014. Brazil is the biggest economy in the region, comprising 38.9% of total regional GDP in 2014, yet Chile far outperforms it in indicators such as the Global Competitiveness Index 2015, at 35th place out of 140 countries compared with 75th for Brazil.
Despite a sluggish economy, Chinese consumers continue to spend as they enjoy ever-rising levels of disposable income. The urban middle-class continues to grow and their numbers will be bolstered in coming years as incomes rise among rural consumers. Greater access to the internet has made it the shopping channel of choice for millions of consumers seeking modern goods and services. On the other hand, spending on healthcare will dominate in coming years as the population rapidly ages.
Emerging Focus: 2015 Outlook for Emerging Market Economies (EMEs)
EMEs will face a diverging growth outlook in 2015, while continuing to lead the global growth momentum. Low fuel prices will benefit energy-importing countries thanks to savings to countries and consumers and narrow current account deficits, but it will depress the revenues of commodity-exporting emerging countries. Meanwhile, increased volatility in capital inflows and currency, and further geopolitical destabilisation in some countries/regions remain the major risks for EMEs.
Euromonitor’s Markets of the Future reports identify Bangladesh, Cambodia, Laos, Myanmar and Sri Lanka as the region’s next generation of consumer markets. Although consumers in these countries have limited purchasing power, growth is strong and rapid urbanisation, poverty reduction, economic growth and the establishment of modern retailing formats are supporting sales of a wide range of consumer goods. Many big-name brands are well established in specific categories, whilst local brands continue to dominate elsewhere.