Consumer confidence has driven market rallies, lifted corporate profits, toppled political regimes, closed banks and fueled protests. Now, it is re-shaping the global economy, moving the consumer center of gravity further east toward Asia and south toward Latin America.
Geography alone no longer defines emerging markets-consumer trends do. Trends like the dominance and expanding influence of women shoppers, the rise of a global middle class, an aging population and mobile media convergence. However, more is unknown than known about these segments and this report is intended to deliver singular insights into each area of opportunity. Despite differences between developed and emerging nations, consumers universally enjoy unprecedented choice, power and influence over brands.
A changing world requires changing approaches. Successful companies will need to adopt more flexible business models, manage risk across countries, balance local and global considerations, reconsider the role of emerging markets and continue to monitor the pulse of the global consumer as the pace of change rapidly increases.
In 2009, between 75 and 100 percent of global consumers agreed they were in the grips of a recession according to the Nielsen Global Omnibus Survey. Just two years later, emerging markets had re-ignited their economic engines while Western Europe, Japan and the U.S. continued to struggle against financial headwinds. The factors contributing to emerging market growth are manifold, including:
For most of the 20th century, industrialized nations like the U.S. and Japan were major forces driving economic growth. In a dramatic paradigm shift, emerging markets now are expected to take the lead, thanks to an average annual gross domestic product [GDP] growth rate roughly 50 percent higher than developed markets per the International Monetary Fund. What differs this time around is that growth is being driven by a new consumer. Global consumption patterns moved directionally with GDP growth rates, hitting seven percent by the second quarter of 2011.
Success on a global level requires thinking differently about markets and consumers, uncovering new insights about the dynamics of a new marketplace and capitalizing on the opportunities presented by a changing world.
Growth opportunity exists where macroeconomic forces like market expansion, retail development and technology reach converge with consumer forces like time constraints, discerning shoppers, connectivity and individuality. Flexible, fluid business models characterize emerging markets, and established countries will need to adapt to compete and survive. Rising risk accompanies rapid growth and companies will face the dual challenges of managing that risk while capitalizing on new market opportunities.
Another test of management skill will be the ability to deliver local-centric products around the world at an affordable price. However, redefining “emerging” on the basis of demographic characteristics versus geography should help ameliorate that issue. Ultimately, success as a global player resides in executing the fundamentals: understanding consumer needs and wants and delivering products that fulfill them.