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Strategy Briefing

The Haves and Have Nots: The Impact of the Widening Gap Between Rich and Poor

Nov 2011

Price: US$2,600

About this Report

About this Report

The income gap between rich and poor has increased steadily in line with economic progress, but only recently, with unemployment and austerity measures hitting the poor and “squeezed middle” the most, has public resentment against inequality reached a peak. This new global report examines how the rise of an increasingly wealthy elite at the top and a growing pool of low-income consumers at the bottom is affecting household expenditure patterns, and how this will impact marketers.


What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings
     

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Delivery format

PDF/Word
Downloadable from MyPages

Table of Contents

Table of Contents

EXECUTIVE SUMMARY

Demand Factors

Levels of inequality

  • Chart 1 Gini Coefficient by Country: Highest Versus Lowest Scores in 2010

Spending patterns

Consumer Market Trends

Outlook

INTRODUCTION AND DEFINITIONS

Introduction

The growing gap between rich and poor

Inequality: good or bad?

  • Summary 1 Reasons for Economic Inequality

Definitions

Decile groups

Gini coefficient

Social classes

INCOME PATTERNS

Income Disparity

South Africa scores highest on Gini Coefficient

Latin America is the most unequal region

Gap continues to grow in China and the US

Europe is more egalitarian

  • Table 1 Gini Coefficient by Country 2005/2010

Income by decile

  • Table 2 Average Household Disposable Income in Deciles 1 and 10 in Major Markets 2010

The growth of HNWIs

  • Chart 3 HNWI Population by Country 2009-2010

FACTORS DRIVING THE INCOME GAP

Economic development

  • Chart 4 Gini Coefficient, GDP Growth and Per Capita GDP in Key Markets 2005/2010

Labour and technology

Wages affected by changes in supply and demand

The decline of heavy industry

Jobs become more service-orientated

  • Table 3 Employment by Type in Selected Countries 2005/2010

Government intervention

Right- versus left-wing ideals

Measures to reduce inequality

Attitudes are changing in the West

The effect of tax reforms

Raising the minimum wage

  • Table 4 Minimum Wage in Selected Countries 2005/2010

Inflation

Property prices

  • Chart 5 Index of House Prices in Selected Markets 2005-2010

Energy and fuel prices

  • Table 5 Index of Electricity, Gas and Other Fuel Prices 2005-2010

Sociological factors

Culture, religion and immigration

The move from East to West in Europe

  • Chart 6 Leading Recipients of Migrant Remittances Among Developing Countries 2005/2010

Gender inequality

  • Table 6 Women’s Annual Disposable Income as a % of Men’s 2005/2010

Education

  • Chart 7 Households by Education of Head of Household 2010

Urbanisation

The rural exodus

Urbanisation creates new middle class in emerging markets

The suppression of Chinese peasants

Belgium and Australia have highest urban ratios

  • Chart 8 Urban/Rural Household Split in Selected Countries 2010

SPENDING PATTERNS

Maslow’s Hierarchy of Needs

Poorest consumers spend most on food and housing...

...and dedicate higher share of income to drinking and smoking

Healthcare important to all

Clothing spans both essential and discretionary purchases

The rich travel in style

Communication gains importance among low-income consumers

Private education remains the preserve of the rich

  • Table 7 Decile Expenditure on Alcoholic Beverages and Tobacco 2010
  • Table 8 Decile Expenditure on Clothing and Footwear 2010
  • Table 9 Decile Expenditure on Communications 2010
  • Table 10 Decile Expenditure on Education 2010
  • Table 11 Decile Expenditure on Food and Non-alcoholic Beverages 2010
  • Table 12 Decile Expenditure on Health Goods and Medical Services 2010
  • Table 13 Decile Expenditure on Hotels and Catering 2010
  • Table 14 Decile Expenditure on Housing 2010
  • Table 15 Decile Expenditure on Leisure and Recreation 2010
  • Table 16 Decile Expenditure on Transport 2010

CONSUMER MARKET TRENDS

Key trends

Premium versus economy buying

An age of frugality

Strategies to attract low-income consumers

The impact of the internet

Staying in

Mobile phones for all

The market for luxury goods

Quality takes the place of “bling”

Growth fuelled by BRICs

Luxury fashion brands pick up in US

Luxury electronic gadgets see dynamic growth

  • Chart 9 The Global Market for Luxury Goods 2005/2010

Demand for luxury travel continues apace

  • Table 17 Attitudes towards luxury travel in North America 2011

Discount shopping

Grocery discounters

  • Table 18 The Global Market for Grocery Discounters 2005-2010

The growth of private label

Fast fashion

The dollar store boom

Consumer foodservice

Restaurant chains emphasise value positioning

Fast food companies introduce budget options in emerging markets

KEY MARKET TRENDS

Brazil

The tide is turning

Government measures aid the poor

North-south divide

Poor spend most of budget on essentials

  • Table 19 Brazil: Inequality Statistics 2010

China

Population gets richer, but income gap widens

Most people fall into the lower classes

Wealth resides among young urbanites

Poor spend more than half their budget on food

  • Table 20 China: Inequality Statistics 2010

France

Egalitarian ideals persist

Baby Boomers are the most prosperous

The rich spend more on leisure

  • Table 21 France: Inequality Statistics 2010

Germany

A wealthy, mature market

The elderly benefit from accumulated wealth

Education is a key priority for rich households

  • Table 22 Germany: Inequality Statistics 2010

Japan

Class divisions emerge

40-somethings among the highest earners

Housing a major expense for Japanese

The gap will widen

  • Table 23 Japan: Inequality Statistics 2010

Russia

Transition to market economy benefits the elite

But Russia still dominated by lower classes

Younger adults are most prosperous

The affluent are more mobile and better educated

  • Table 24 Russia: Inequality Statistics 2010

UK

Social mobility remains low

Income gap rising

Wealth concentrated among the over 65s

And in the South East

  • Table 25 UK: Inequality Statistics 2010

US

No longer a classless society?

Decile 10 households account for a third of income

The bulging wallets of the Baby Boomers

Regional disparities

Potential for higher spending by wealthy households

The perception of “haves” and “have-nots”

  • Table 26 US: Inequality Statistics 2010

FUTURE OUTLOOK

The pressure for reform

Gini coefficient set to grow

  • Table 27 Forecast Gini Coefficient by Country 2010/2015

Opportunities for marketers

Polarisation to continue

Wealthy urbanites to fuel demand for discretionary items

Growth expected for luxury goods and travel

India holds the most potential

  • Table 28 Forecast Sales of Luxury Goods by Country 2010/2015

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