Affordability, Value and the Cost of Living: Cities as Hubs of Consumer Spending

Delivery

This report comes in PPT.

Key findings

Cities are hubs for consumer spending

Cities are the undisputed leaders when it comes to spending. In 2023, 80% of consumer expenditure globally is expected to be generated by urban areas. Moreover, the average urban consumer is set to spend more than three times more than someone living in a rural area.

Weak growth in urban spending in 2023

In 2023, year-on-year urban consumer expenditure growth is projected to be at its third slowest rate since 2000, due to the ongoing cost of living crisis. Weak spending is expected to have a greater impact on city economies that derive a large share of GDP from consumption.

Urbanites likely to seek value and affordability in 2023

Urban consumers in 2023 will display conservative spending habits, prioritising necessities and cutting back on discretionary expenditure. Discount stores and private label goods will thrive as people emphasise value and affordability; however, affordable indulgences will remain popular. Consumers are also expected to use digital tools to seek bargains and discounts.

Opportunities can be found in emerging/developing Asian cities

While consumer spending will remain weak in 2023, especially in advanced economies, more robust opportunities are likely to be found in Asian cities, thanks to stronger income growth, a rebounding tourism industry and the reopening of the Chinese economy. Asian cities are also expected to provide stronger growth opportunities in the long term.

Subsiding inflation to boost discretionary spending

Inflation is expected to gradually subside by 2026/2027, which should help reignite consumer spending. Reduced cost of living pressures will boost spending on discretionary goods and services; however, consumers are expected to display more conscious consumption and sustainability-inspired habits that favour quality over quantity.