Seeking growth opportunities from the middle class is no longer sufficient for companies serving consumers in the modern, connected economy. Turning focus to Connected Spenders, a new emerging type of consumer, could solve the shortcomings of the old income-based approach, according to the latest report conducted by Nielsen.
Connected Spenders are a fast-growing new segment of consumers: digitally savvy consumers with discretionary income and are avid shoppers who punch above their income class in spending. They prefer premium products and are on the cutting edge of consuming trends.
By 2025, these consumers will account for half of global consumption, or $260 trillion — making them an indicator of where the world’s consumer spending is heading. There are currently 7 million connected spenders in Taiwan alone, according to the Nielsen Taiwan’s latest study, that sum is expected to grow 57 percent to over 11 million people in 2025. Taiwanese Connected Spenders’ annual spending is expected to continue rising for the foreseeable future.
While the growth of Internet users provided the basis for this growing type of consumer, the key lies in Internet users that are willing to spend additional income. Connected Spenders provide businesses with a new approach to capture market share, replacing traditional income-focused metrics that cater to a generic middle class.
Younger, higher income and willing to spend
Connected Spenders tend to be younger, generate monthly personal income of more than NT$40,000 — and they are often single and without children. According to Nielsen Taiwan’s Connected Spender Study, 52 percent are within the age range of 20 to 34 years old, 57 percent reported they were single and 64 percent do not have kids.
Connected Spenders are present across all income groups. In Taiwan, however, they tend to earn higher income. Over half of the consumers within the higher income bracket are Connected Spenders (52%), while only 32 percent of those with middle income are, and 20 percent within the lower income group.
Lucrative but demanding shoppers
“Connected spenders are an emerging segment of consumers and a group that stands out from from the traditional middle class. They are distinctly independent, confident, and ambitious,” said Desmond Wang, Managing Director, Nielsen Taiwan. “Compared with the common understanding of the middle class, these consumers are more willing to focus on their own individual goals and aspirations — they are more comfortable in the company of strangers, and they are not afraid to be themselves. These consumers are Internet savvy and frequently become ‘influencers’ within their social groups.”
They think before they shop. Around 87 percent of Connected Spenders said they usually decide on a certain brand and product before making a purchase, whereas 96 percent said they check product descriptions first. These consumers are more likely to spend more on products with better designs (84%) and products/food that make them look more physically appealing (73%). High cost product categories that Connected Spenders buy the most include Fashion/Accessories, Travel and Smartphones/Consumer Electronics.
They tend to be impulsive shoppers. Connected Spenders are price-conscious, constantly on the lookout for special deals and promotions, and they are more likely to make impulsive shopping decisions when they spot desirable products (72%). Around 88 percent reported they would buy more products during promotional events — substantially more than conventional middle class consumers (61%). Only 51 percent said they have a detailed plan for their expenditures.
Online retail channels are gaining a foothold among Taiwan’s Connected Spenders, as annual online spending grew 41 percent between 2014 and 2016. They are true “omni-channel shoppers,” present in both physical stores and digital marketplaces. Most notably, Connected Spenders in Taiwan prefer to visit brick-and-mortar shops instead of online channels for food and beverages (96%), household products (90%), and consumer electronics (87%).
High mass media involvement
The lives of Connected Spenders in Taiwan are digitally integrated online, showing a particularly high involvement in social media (63%). They are also highly reliant on media, with 87 percent reporting that they feel the need to keep up with the news constantly. Approximately 60 percent said they believe media reports are mostly true and 57 percent said most media outlets are objective and unbiased. An overwhelming 82 percent said media was the main topic of conversation with friends and family, while only 66 percent of middle class respondents said the same.
“Consumer-facing businesses should be focusing in on Connected Spenders. These consumers will be at the front of the pack in terms of product trends, digital engagement and social commerce. They have the disposable income, and are willing to spend on the products that allow them to express their individuality and ambitious lifestyles,” said Wang. “For marketers coping with restrained economic growth, tapping into this consumer group will be key for driving success and brand awareness among younger consumers for the foreseeable future.”
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90% of the world’s population. For more information, visit www.nielsen.com