To stay ahead of changing consumer priorities and values, companies must embrace megatrend analysis. Megatrends are long-term consumer-driven trends that have a global impact. They represent fundamental shifts in consumer behaviour that define what is happening in consumer markets and have a significant impact on companies across industries.
To analyse megatrends effectively, it is important to recognise the full picture, starting with having a clear understanding of the underlying forces (the drivers) which form the backdrop to consumer behaviour.
There are five socio-economic drivers shaping consumer megatrends
Shifting Economic Power: The global economy has witnessed a paradigm shift. Rapid economic growth in developing and emerging markets is creating new openings for investors who are keen on diversifying away from stagnating advanced economies to target a rising young mid-income, tech-savvy, online consumer in other markets.
While there are still challenges to overcome, such as widespread inequality and political instability, growth in digital literacy and improving digital infrastructure in emerging and developing markets is enabling businesses to leverage new audiences and realise commercial opportunities.
Population Change: As the global population approaches eight billion, demographic shifts combine to reshape consumer lifestyles and purchasing decisions. The ageing population is one of the most important population shifts in recent years. Senior consumers are an influential and attractive cohort for businesses, rising in numbers, affluence and digital ability.
Other key changes include urbanisation, which while temporarily reversed by the pandemic, is set to pick up pace over 2022-2040, and migration, bringing different skills, ideas and backgrounds, driving multiculturalism and improving diversity.
Environmental Shifts and Pressures: Consumers are more worried about the state of the planet than ever, and are concerned about its impact on future generations. Consequently, they are making more sustainable choices, driving demand for green products and forcing businesses to innovate and invest in sustainable products and solutions.
However, amid current rising prices and economic uncertainty, the challenge for businesses is to develop cost-effective products that are sustainable at a more reasonable price or create enough benefits for consumers to justify spending more.
Technological Advances: Technology continues to advance at a rapid rate, increasingly becoming interwoven with consumers’ lives, reshaping their behaviour and the expectations they have of products and services and the companies behind them.
The internet has been one of the most transformative technologies of the modern era and underpins other technological advancements such as artificial intelligence, augmented reality/virtual reality, and the Internet of Things. Digital investment is no longer optional for any business, but a necessity to stay relevant and competitive.
Changing Values: Consumers’ views and beliefs about the world are constantly evolving, shaping perceptions, attitudes, motivations and their priorities. Cautious consumerism, triggered by the rising cost of living and lingering political and economic uncertainty, is penetrating consumers' hearts and wallets. Consumers identify with their purchases, supporting the companies that correspond with their values and boycotting the brands that do not share their beliefs. The importance of trust, authenticity and uniqueness grows as every consumer’s voice matters.
Looking ahead, the drivers of megatrends will continue to evolve
Key takeaways:
- With advanced economies stagnating, emerging and developing markets are expected to provide greater opportunities as the financial status of consumers in these markets improves.
- As the global population continues to expand and shift, understanding and reaching different consumer segments is necessary for successful business strategy.
- Environmental pressures are increasingly affecting buying behaviours, making it critical for businesses to review and adapt their communication, product portfolios and pricing strategies to appeal to consumers.
- As internet access and consumers’ reliance on technology continue to expand globally, technology investment becomes more critical to future innovation strategies and operational effectiveness of businesses.
- Conscious spending is supplemented by cautious consumerism, making it crucial that brands adjust their offerings to reflect both tangible and emotional value to attract consumers.
For further analysis, read our report, Understanding the Five Drivers of Megatrends.