Affordable Luxury in Emerging and Developing Markets and the Impact

Expansion of middle class households

Growth in the number of middle class consumers – fuelled by factors such as economic progress, higher productivity, educational attainment, urbanisation and more working women – is driving up average income and spend.

Increased discretionary spending

Low income consumers coming out of poverty are increasing expenditure on a range of discretionary items, such as premium packaged foods, dining out, health and beauty, electronics, fashion and other products and services.

Newly affluent shoppers seek status and sophistication

With rising incomes and greater exposure to Western culture, the habits, tastes and needs of middle class consumers are evolving. Shoppers are seeking aspirational purchases and accessible luxury brands at good value.

Demand for quality above quantity

Emerging market shoppers are not prepared to compromise on quality: in general, they would rather save up their money to buy fewer prestige brands than purchase a large number of inferior products.

Modern retail formats widen availability of Western brands

The rise of modern retail formats has opened up a market for high quality packaged foods, beauty and personal care, and other Western-style consumer products that were previously unattainable.

Seeking out the best value for money

With regard to fashion and big ticket items, consumers are finding ways to obtain prestigious brands at lower prices, for example by shopping abroad, in sales events or via online marketplaces, factory outlets or resellers of pre-owned goods.

Emerging market strategies

To make products affordable and appealing to emerging market consumers, companies are employing techniques such as paring down local production costs, sachet marketing, regional customisation and establishing an online presence.