Aging Boomers, population shifts, and changes in family sizes are changing the world—literally. Falling fertility and rising age rates in many markets are placing tremendous burdens on global economies. Consider this: in the year 2000, the U.S. housed approximately 72,000 Centenarians. By 2050, that number will exceed 834,000. And the populations of the entire developed world are already older than the U.S. today. Some quick facts across the globe illustrate how we are indeed a world in change:

• Japan is oldest of the major nations—expected to lose 25 million people by 2050, nearly 20%.
• China and India, the two most populated nations of the world, will also experience growing populations over age 65 –nearly tripling in China, and growing to 20% of India’s population by 2050.
• Europe will see an increase in the number of persons of pension-able age per 100 working age persons—from 35 to 75 by 2050.
• North America has a fertility rate below the global median, which will lead to a rising elderly population.

Why aging matters
To put it directly, old folks are expensive. A typical elderly consumer requires 27% more healthcare resources than a working adult, while a child consumes 28% less. Countries will struggle to provide healthcare with no increase in working adults to offset the costs. Russian President Vladimir Putin may have put it best when speaking about his country’s future: “We are facing the serious threat of turning into a decaying nation.”

Where will growth come from?
Cultures for the past 50 years have been based on the interests of the young— the future will be based on those of the older consumer. In developed markets, these consumers typically have smaller household sizes, which translate to a larger share of discretionary dollars. They also tend to have more leisure time and shop more frequently, which increases the opportunity for marketing efforts to them.

The growing middle class—in large developing markets such as India and China—also represent an opportunity, as consumers begin to move to acquire the goods and services of their counterparts in more developed markets. Finally, immigration will help fuel growth in the future, as working-age adults seek economic opportunities. International boundaries will likely continue to erode as countries compete for immigrants, especially the skilled ones.

Actions speak loudly
To witness the impact of the changing world dynamics, one needs to look no further than retail shopping patterns. Money makes the world go round—and how it spins is dependant on who is shopping, where they are spending, what they are buying and why. Understanding consumer shopping behavior around the world provides the insights necessary to make the most of strategic marketing decisions.

U.S. retailing trends
In the U.S., high gas prices and a declining housing market have taken their toll on the American economy. Inflation is hitting retail store shelves hard—with higher energy costs and global demand for corn, wheat, meat, poultry and seafood—and consumers are responding with their shopping behavior.

Value and convenience-oriented channels such as warehouse clubs, supercenters and dollar stores are clearly winning in the marketplace. Since December 2001, most store expansion has come from channels outside of traditional food, drug and mass-merchandisers—the dollar store channel alone has grown by 50% in that time period. These low-priced, limited-assortment retailers are not only very entrenched among low-income households, but are now shopped by 64% of all U.S. households.

Stocking up and buying in bulk are tactics used to save money by over half of U.S. households who shop the warehouse club format. And pay-at-the-pump offerings among the Convenience/Gas channel is proving to be advantageous for the 78% of households who are choosing these retailers to fill up more than just their bellies.

Other key trends impacting the U.S. retail landscape include a growing aging population, where changes to store sizes and formats, the growth of functional foods, and advances in product packaging technology will likely be affected. Also here to stay are efforts to serve a growing ethnic consumer base, more opportunities to market convenient meals and cleaning solutions, and products geared toward better health and wellness. Items hot on the list include: organics, functional foods, whole grain breads/pasta and the elimination of trans fats.

The European consumer
While many markets in Europe are maintaining growth or growing, this region is slated to decline in the total number of individuals. As a result, this market, which is one of the largest, is actually on the verge of contraction. In addition, aging populations are having a big impact on overall shopping patterns. While there are 20 million seniors in Europe today, there will be 27 million 20 years from now.

Established markets are becoming more and more fragmented in terms of trade channels, making it a challenge to reach consumers consistently. A Nielsen ShopperTrends 2007 report for Europe indicates that shoppers visit the supermarket more frequently than in the past and frequent a number of different store types. The latest round of the study measured an increased number of shopping trips in five of the 20 countries. However, there exist significant differences between various markets. In Austria, Germany and Denmark shoppers go to the supermarket more than 22 times per month. Compared with Norwegians, Belgians, the Finnish and the Irish who claim to visit the grocer less than four times per month.

The result of these differences in store infrastructure is that shoppers spend diversely for their groceries and allocate their purchasing power to a mixture of formats. The modern super/hypermarkets still do not capture all consumer purchases—the specialists still play a significant role in many markets. The Polish and the Czech, for instance, visit their butcher nine times every month, while consumers in Italy, Spain, Portugal, Switzerland and Belgium go to the butcher more than five times. There are also similar examples related to the fish specialist, the bakery, the vegetable vendor and the open market. This clearly demonstrates that persistant behaviors are still rooted in a country’s culture.

While there are general overriding themes that manufacturers and retailers can use with European consumers, there needs to be recognition that local efforts may need to be focused to a particular market.

A Latin American outlook
The outlook in Latin America —where seven countries of Brazil, Mexico, Colombia, Argentina, Peru, Venezuela and Chile make up 78% of the region— is cautiously optimistic. Population growth is expected to continue for the next 15 years, opportunities to increase business will arise in underdeveloped countries, and year-over-year consumer confidence increased six points in 2007. There are wide variances among the highest and the lowest earners in Latin America with less than 10% of the population considered in the high Socioeconomic Level (SEL). However, as economies are growing and inflation is controlled, the lower SELs will have a better purchase capacity.

Consumers of low resources usually make most of their purchases in traditional channels, such as the mom-and-pop store. As the socioeconomic level improves, participation in modern supermarket retail channels also improves. For low-income consumers, proximity and empathy between the merchants and shoppers are the main value drivers. In some cases, these chan-nels may have lower prices than supermarkets due to products accessed through “non-formal” distribution methods. For these consumers, local brands are typically strong and they provide options for people with low out-of-pocket spending power.

Although mid- and high-income consumers usually prefer supermarkets, proximity channels are becoming a comfortable alternative. In high-income neighborhoods, there are specialized traditional stores (better quality, assortment and purchase experience). These consumers mention proximity as an important factor in the channel decision-making process. Superettes are growing, as they represent a “near-self-service” option, many of which are starting to include specialized departments such as wines.

The strength of China
China, now the world’s 4th largest economy by GDP, behind U.S., Japan, and Germany (and ahead of the U.K. and France) will contribute more to global economic growth in 2008 than any other nation on Earth. Its rapid adoption of technology and increasingly mobile consumer base (60 new airports are slated to open within the next 2–3 years) help make this country a power-house player.

China’s urban segment, which comprises 43% of the population (560 million), is growing at 10% a year. China’s new office elite now boasts four million people who work for Multinational Corporations or Joint Ventures. And while there were only 15 billionaires living in China in 2006, that number grew more than four-fold in 2007 to 66.

As the economy growth rate edges upward, retail sales grow even faster, representing year-over-year growth of 17% and 16%, respectively. However there is growing price pressure as food prices are growing faster than disposable income. Prices for food went up by 12.3% over the previous year, especially for fresh items. Certain staple categories saw particularly strong price increases, such as the edible oil category (+23%) and instant noodles category (+11%). China’s RMB currency is expected to appreciate a further 10% in 2008 to help curb this growth.

Other key trends impacting China include the growing rate of obesity (there are over 60 million obese and 200 million overweight), the strong acceptance of local brands, and the competition between local and foreign retailers. Despite local retailers holding a larger market share, foreign retailers retain higher shopper equity.

A measure of success
Regardless of the many cultural, political or socioeconomic differences there may be in every corner of the world, the consumer is always king. Success will come to retailers who define themselves by who they sell to and how they sell to them, not by what they sell. Success will come to manufacturers who define themselves by who they sell to and the solutions they solve for their consumers and retail partners, not by what they sell.

The content of this article was summarized from Nielsen Global Services' "Consumers around the World" conferences held April 11 and 14, 2008, in New York and Great Britain. Expertise was drawn from the following speakers:
Joe Bucherer, Vice President, Marketing, Nielsen Consumer Information
Todd Hale, Senior Vice President, Nielsen Consumer Information
Doug Anderson, Executive Vice President, Research & Development, Nielsen Consumer Panel Services
João Carlos Lazzarini, Director, Nielsen Retail Services, Brazil
Oliver Rust, Executive Director, Nielsen Client Service, China