Demographic shifts are having a profound effect on consumer markets around the world, which will require brands to focus on three key groups of consumers over the next 15 years, according to recent analysis from well-respected international consultants and strategic analysts McKinsey.
The work highlighted some findings from the McKinsey Global Institute in an article for the Harvard Business Review.
They predicted that per capita spending will be the engine of consumption growth over the next 15 years, as the rate of global population growth slows, and that certain groups of consumers will drive future growth.
With population growth expected to account for just one-quarter of increased global consumption over that time, they argued that brands will need to build up a much more detailed picture of these essential consumer groups than they ever have before, to target their business activity effectively.
Don’t forget the 60+ers
For example, despite so much current marketing activity being aimed at millennials and other young consumers, marketers would be advised to also concentrate on consumers aged 60+ in the US, Western Europe and Northeast Asia.
Their number is expected to increase to 222m people in 2030, accounting for 60% of total urban consumption growth in Western Europe and Northeast Asia alone.
As people lead longer and healthier lives, their consumption will not be limited to just healthcare products, but their spending power is expected to extend to many other categories as well.
According to McKinsey, these older consumers in the US will contribute more than 40% of consumption growth in housing, transport and entertainment, and they are already spending significantly more than they used to on home improvement.
“Companies in every sector — some of which have never been associated with the elderly — will need to prioritise this market as never before,” the McKinsey consultants advised.
The Chinese are coming
The second group identified by McKinsey is China’s working-age consumers aged 15 to 59, whose per capita consumption is expected to double over the next 15 years. By 2030, they will number 100m people and spend 12% of all consumption in cities worldwide. Note, not just in China.
“These consumers are the successors to Western baby boomers who were, in their time, the richest in history in their prime years,” said the consultants.
Dividing up your attention in the USA
Finally, the third key group is working-age consumers in North America. Although their number and per capita spending is expected to grow only modestly, rising inequality and varied spending power “means companies need to work harder to offer goods and services at very different price points”. One size will no longer fit all consumers.
“Companies need to be in the right places,” the article concluded. “Cities are where 91% of global consumption will take place over the next 15 years – the trick will be knowing which cities, and even which neighbourhoods within cities will house the highest-spending consumers.”
At MOP we say that with Australian companies becoming more and more export focused, urged on by industry associations and government at all levels, these findings should provide much food for thought for many entrepreneurs and managers.
And with Australia’s population set to rise to 50 million or so in the relatively near future, many of whom will be Chinese or of Chinese descent, or aged 60+, it’s clear that these findings have significant relevance for companies doing business inside our borders, too.