Future consumption patterns are expected to be heavily impacted by a geographical shift in consumer purchasing power. For example, the Asia Pacific region is poised for unprecedented growth in real disposable incomes, driven by robust economic development, urbanisation and technology adoption. This combination of factors promises to make the region a hotbed for consumer spending and opportunity in the years to come. In 2040, Asia Pacific is expected to account for 39% of the global disposable income, compared to 32% in 2022. Consequently, companies that seize the chance to tap into these emerging markets can benefit from the increasing purchasing power of the affluent population and gain a competitive edge.
Changing consumer spending landscape
Growth in disposable income means there is more money to be spent on discretionary categories rather than essentials, leading to the shifting consumer spending landscape. Education is set to outpace other categories, due to the rise in technology, with greater need for students to learn new skills and stay updated with the latest technological advancements. Due to rapidly growing incomes, Asia is set to outpace the rest of the world, with China and India accounting for most of the spending increases. In China, single-person households will account for the largest share of the education expenditure, a large part of those being seniors and singletons striving to requalify, while in India the largest allocations will come from couples with children, as many parents will strive to secure well-paying jobs for their children.
Unfolding values and motivations
As the high cost of living remains a prime concern for many households, consumers are seeking value for money more than ever before, but that's not their only priority. With a growing awareness of environmental impact and technological advancements, they are also prioritising other newfound values.
Convenience stands out as a top priority, saving consumers time and effort and helping them to leverage their daily routines. As a result, products that automate tedious and time-consuming tasks, such as robot vacuum cleaners, dishwashers, air fryers, and all-in-one washing machines, are becoming increasingly popular as they allow consumers to simplify their lives and focus on what matters most.
The demand for personalised and customised approaches is accelerating due to improvements in technology and data collection. The trend is evident across various industries, from beauty and personal care to travel and tourism. The Four Seasons Safari and Islands Collection's Milestone Memories programme serves as an excellent example of this trend. The programme provides an exceptional range of tailored experiences that cater to every guest, delivering a unique and personalised adventure that's perfectly designed for their needs, whether it's a milestone birthday, wedding anniversary or long-awaited family holiday.
Moreover, with the effects of climate change becoming increasingly palpable, consumers are becoming more mindful of the environmental impact of the products and services they choose. In response, companies are looking for innovative yet cost-effective ways to reduce their carbon footprint and resource consumption. Procter & Gamble, a multinational corporation, is leading the charge by actively promoting cold water washing with its flagship Ariel and Tide brands. This eco-friendly practice is not only affordable but also effortless, making it a practical solution for consumers who are looking to reduce their environmental impact without sacrificing quality.
Evolving shopping journey
Multilayered value coupled with a tightening environment changes the consumer shopping journey. Today’s consumer is more frugal than ever before, with an increasing focus on finding bargains and saving money wherever possible. However, when it comes to certain products, such as those that offer multiple functions, durability or superior quality, consumers are often willing to pay a premium for the added value. In addition, consumer loyalty to brands is declining, with many shoppers heavily researching all the options and switching to new brands rather than sticking with the same old favourites. This presents a challenge for companies seeking to maintain a loyal customer base, but by engaging with consumers and building strong relationships, brands can foster lasting loyalty and earn the trust and respect of their customers.
Conclusion: To create and implement effective strategies, it is imperative to have a thorough understanding of your customer base. Thriving businesses understand that value goes beyond just price and includes elements like convenience, sustainability and overall experience. Brands that prioritise these values can cultivate lasting customer loyalty and even command a premium in the marketplace.
For further discussion on this topic, read our report, New Consumer Landscape: Consumerism and Beyond.