Global Consumer Trends: Income Complexity
Introduction
The author's Income Complexity Mega-Trend reflects the fact that consumers' financial circumstances and attitudes towards wealth are become increasingly complex. Consumers are becoming wealthier, but the global economic crisis has prompted consumers to scrupulously re-evaluate their spending habits. While they have significantly reined in spending in some categories, they are trading up in others
Scope
*Detailed trend analysis outlining what constitutes 'value' for consumers (trends are, after all, a reflection of what's important to consumers)
*Global in focus, but also offers country-by-country and sector insights thereby catering to top-line or more specific information needs
*Covers all major FMCG sectors, but also with applicability to wider consumer goods audiences
*One of 10 dedicated mega-trend reports outlining the most important issues shaping global consumers' buying behavior both now and in the future
Highlights
There is a growing inclination for consumers to shop at both the premium and value ends of the FMCG market. Rising incomes and quality expectations drive the market for premium products that claim to offer everyday luxury. Conversely, a proliferation of lower-cost products of similar quality to big brands is strengthening value market appeal
Distinctions between emerging and developed markets are important while the pursuit for value is universal, the propensity to trade up is generally favored by consumers in developing nations. Newly-acquired wealth has presented these shoppers with an abundance of product and brand choices, and subsequently cultivated an appetite for premium wares
Consumers are attaching increasing importance to experiential consumption over wealth accumulation. Thus brand name and designer labels alone will not suffice to communicate luxury, especially now that even everyday categories have premium iterations, diluting the notion of material luxury altogether
Reasons to Purchase
*Understand the significance of the different income-aligned trends across territories and FMCG sectors to help support market diversification plans
*Save time and gain maximal insight by using this 'one-stop-shop' resource which offers a clear and up-to-date framework for understanding consumers
*Access data from two waves of global primary research to increase the likelihood of being 'on-trend' with NPD and marketing activities
Overview 1
Catalyst 1
Summary 1
TABLE OF CONTENTS 2
Table of figures 3
Table of tables 4
INTRODUCTION: THE IMPORTANCE OF TREND-TRACKING 5
Tracking consumer mega-trends is fundamental to long-term success 5
Trend-tracking insight 1: mega-trends can be classified in two ways according to desirable benefits and societal complexities 6
Trend-tracking insight 2: trends are aligned with pre-existing, but evolving human values, attitudes, needs and behaviors 7
Trend-tracking insight 3: mega-trends can be broken down into trends and sub-trends highlighting that trend frameworks provide structure and clarity at a time of 'information overload' 8
Trend-tracking insight 4: manufacturers, retailers and researchers/futurologists perpetuate trends 12
Trend-tracking insight 5: adopting a broader, global perspective to trend-tracking facilitates better decision making by overcoming 'category myopia' 14
Trend-tracking insight 6: trends have longer-term implications than fads and can be categorized by evolvement 15
Trend-tracking insight 7: for every trend there is a 'counter-trend' while 'trend-crossover' is also and important phenomena 17
Takeouts and implications: a trend framework boosts the quality and frequency of insight generation ensuring maximum return from the broader market research processes in place 18
THE FUTURE DECODED: DECIPHERING THE INCOME COMPLEXITY MEGA-TREND 20
MEGA-TREND SYNOPSIS: Consumers are increasingly seeking luxury and value simultaneously 20
TREND: Hi-lo consumerism: consumers are shopping at both premium and value ends of the market 21
SUB-TREND: 'Sacrificial consumption': trading down to trade up 21
Consumers from Europe have modified their approach to grocery shopping to cope with the downturn 22
There were notable distinctions in the purchasing behavior of US and Brazilian consumers in response to the downturn 28
Consumers in the developing nations of Asia-Pacific demonstrate a strong and growing interest in purchasing higher quality products 35
Consumers from MENA are not as brand loyal as shoppers globally 41
Key takeouts and implications: consumers are making considered sacrifices in their spending behaviors as value takes precedence over quality 42
SUB-TREND: The 'democratization of luxury': the mass marketing of upscale products 43
Key takeouts and implications: luxury now takes many forms, facilitating its accessibility to the masses 46
SUB-TREND: Bargain hunting: consumers seek and take pleasure from better value for money 47
Growing value consciousness in Europe has manifested in greater responsiveness to promotions 47
Consumers in the Americas utilize diverse tactics in order to save money on groceries 53
To many Asia-Pacific consumers, a focus on value is not synonymous with saving money 59
Middle Eastern consumers are using a variety of tactics to save money at the supermarket 66
Key takeouts and implications: consumers are willing to invest more time into researching and shopping around in order to get the best deals 71
SUB-TREND: Opting for private label: consumers embrace own brand alternatives across the value spectrum 72
Europeans' propensity to use private label ranges as a store choice determinant reflects growing trust in such products 72
Brazilian consumers are less influenced by private label products than their US counterparts 75
For consumers in emerging Asia-Pacific countries, stated influence of private label products does not necessarily result in corresponding purchase behavior 77
MENA consumers are less likely than shoppers globally to buy into the benefits of private label 80
Key takeouts and implications: private label is accumulating a dedicated following around the world as consumer awareness and trust grows 82
TREND: Complexing financial circumstances: the disparate income and wealth situation worldwide 83
SUB-TREND: Increased wealth: the rise of middle classes globally fuels consumer market growth 84
Key takeouts and implications: the global downturn stalled robust economic growth, but wealth levels should return to pre-recessionary times once the economy recovers 87
SUB-TREND: Income polarization: the persistence of income inequality and high rates of poverty 87
Key takeouts and implications: living standards are improving but income inequalities intensified following the global downturn 91
SUB-TREND: Indebted consumers: high levels of debt influence and suppress consumers' purchase behaviors 91
Financial pressures are making European consumers more disciplined in regards to managing their wealth 91
There were important distinctions in how US and Brazilian consumers chose to manage their debt 94
Asia-Pacific consumers are saving more and making conscious efforts to reduce their credit card debt 97
Despite growing efforts to save, consumers from MENA are still dependent on credit 99
Key takeouts and implications: Consumers are becoming more prudent and disciplined with their spending, an approach which will intensify as the recession endures 101
TREND: Inconspicuous consumption: the impact of shifting attitudes on luxury purchases 102
SUB-TREND: Experiential consumption: perceptions of luxury are shifting away from the purely material 102
The importance of experiential consumption is an intense and growing sentiment shared by most Europeans 102
Brazilian consumers in particular have attached greater importance to the pursuit of new challenges in recent years 104
Asia-Pacific consumers generally agree that seeking new challenges in life is more important to them than accumulating material possessions 106
The desire for new experiences has gained momentum for Middle Eastern consumers in recent years 108
Key takeouts and implications: News experiences are taking precedence over wealth accumulation for consumers around the world 108
SUB-TREND: Inverse snobbery: consumers view displays of wealth negatively 109
Key takeouts and implications: the downturn has brought about a new wave of inconspicuous consumption 110
APPENDIX 111
Definitions 111
Methodology 111
Further reading and references 112
Ask the analyst 113
Datamonitor consulting 113
Disclaimer 113
LIST OF TABLES
Table 1: Total private label penetration and spend ($ millions) in Europe, by country, 2002-2012 73
Table 2: Total private label penetration and spend ($ millions) in the US, by country, 2002-2012 76
Table 3: Total private label penetration and spend ($ millions) in Asia Pacific, by country, 2002-2012 79
Table 4: Gross Domestic Product (GDP) at Purchasing Power Parity (PPP) per capita, by country and geographic region, 2004-2014 86
LIST OF FIGURES
Figure 1: Datamonitor's mega-trends are having a long-term and substantive impact on the marketing landscape and can be grouped into two categories 7
Figure 2: Consumer behavior and the innovations targeting it inevitably fit into a 'trend hierarchy' 8
Figure 3: Trend tracking can be a source of (comparative) competitive analysis 10
Figure 4: Datamonitor's mega-trend framework helps set the agenda for the specific topics covered in the New Consumer Insight (NCI) research stream 11
Figure 5: Trend development is dictated by both 'consumer pull' and 'manufacturer push' and Datamonitor offers the intelligence tools to capitalize on this reaity 13
Figure 6: In a consumerist global culture, the broad consumption spheres/segments transcend borders 15
Figure 7: Several factors distinguish a trend from a fad 17
Figure 8: Changing attitudinal and behavioral circumstances surrounding wealth underpins the Income Complexity Mega-Trend 20
Figure 9: Hi-Lo consumerism reflects the parallel themes of consumers shopping at both ends of the market 21
Figure 10: More than four-in-ten Europeans demonstrate a willingness to sacrifice some of their favorites brands in order to save money 24
Figure 11: The propensity to trade up in the food category has been overshadowed by the pursuit of greater value 25
Figure 12: More than half of Russian consumers traded up in the personal care category between February and August 2008 25
Figure 13: Only a small proportion of Europeans were willing to trade up their alcohol purchases in the on-trade 26
Figure 14: Europeans are more likely to trade up in their at-home alcohol beverage choices 27
Figure 15: While a considerable proportion of Europeans are trading up their household products, value is still more important than quality alone 28
Figure 16: Nearly half of consumers from the Americas are prone to brand-switching to save money 30
Figure 17: About one-quarter of US consumers are trading up in their food and beverage choices, which is less than the global average 31
Figure 18: Illustrating the importance attributed to physical appearance, the majority of Brazilian consumers have upgraded their cosmetic purchases despite the downturn 32
Figure 19: Brazilian consumers express greater conviction about both the value and quality of their alcoholic drinks, compared to consumers globally 33
Figure 20: Symptomatic of the cocooning trend, consumers from the Americas are more likely to purchase higher quality drinks in the off-trade 34
Figure 21: Less than one-quarter of US consumers are willing to trade up in their household purchases 35
Figure 22: South Korean consumers are particularly disposed to switching brands in order to save money 37
Figure 23: More than two-thirds of Chinese and Indian consumers traded up in their food and beverage purchases between February and August 2008 38
Figure 24: Only one-fifth of consumers from Australia and Japan purchased higher quality cosmetics 38
Figure 25: Less than one-fifth of Asia-Pacific consumers purchased higher quality drinks in the on-trade 39
Figure 26: Consistent with consumers globally, Asia-Pacific respondents were more inclined to trade up when drinking at home, but still prioritized value-for-money 40
Figure 27: Australian and Japanese consumers were the least likely to purchase higher quality household products between February and August 2008 41
Figure 28: Middle Eastern consumers were more likely to switch brands compared to consumers globally 42
Figure 29: The success of masstige launches has prompted a succession of designer labels to lend their names to mass merchandise 44
Figure 30: The boom in masstige cosmetics typifies consumers' desire for high-quality personal care products at a less prohibitive price point 45
Figure 31: Premiumization has facilitated increasingly unconventional notions of luxury 46
Figure 32: Nearly three-quarters of Europeans place greater importance on saving on groceries compared to two years ago 48
Figure 33: French and Russian consumers are most prone to store-switching in order to save money 49
Figure 34: French and UK shoppers have a higher propensity to use coupons for food and drinks compared to consumers globally 50
Figure 35: Promotional offers for personal care products are most influential for UK consumers 51
Figure 36: Consumers from Italy and the UK are most likely to be influenced by alcoholic drink promotions 52
Figure 37: Promotions for household products became more influential for most European consumers between August 2008 and April 2009 53
Figure 38: The vast majority of consumers from the Americas are looking to save money when buying groceries 54
Figure 39: Brazilian consumers are most prone to store switching in order to save money 55
Figure 40: Over half of US consumers are making more effort to use food and drink coupons to save money 56
Figure 41: Brazilian consumers in particular are influenced by promotional offers for the personal care category 57
Figure 42: Consumers from the Americas are more inclined to take advantage of alcoholic drink promotions than opt for cheaper types of drinks 58
Figure 43: The importance of promotional offers in household care has increased for consumers in the Americas 59
Figure 44: Two-thirds of consumers from Asia-Pacific have become more mindful of value as a result of the downturn 61
Figure 45: Over half of South Korean consumers are using price comparison websites to save money 62
Figure 46: Australian consumers are the most concerned about seeking value when shopping for food and beverages 63
Figure 47: Asia-Pacific consumers are more likely to respond to promotions than lower prices alone 64
Figure 48: Alcoholic drink promotions are ranked highest by consumers in Japan 65
Figure 49: Promotional offers for household products are most important to Australian consumers 66
Figure 50: Consumers from the UAE are more concerned with saving money than seeking value 67
Figure 51: About one-third of Middle Eastern consumers are using price comparison websites to save money 68
Figure 52: The majority of Middle Eastern consumers use value-for-money as the basis for their food and beverage purchases 69
Figure 53: Middle Eastern consumers are more likely to purchase personal care products when on promotion than merely cheaper 70
Figure 54: Nearly two-thirds of consumers from MENA are highly influenced by household care promotions 71
Figure 55: Over four-in-10 Europeans are regularly buying private label products to save money 74
Figure 56: Consumers from Europe are considerably more likely to buy into the benefits of private label beauty products over private label alcoholic drinks 75
Figure 57: The influence of private label quality in the Americas is generally in line with efforts made to purchase such products 76
Figure 58: Consumers from the Americas have the most confidence in private label beauty products when compared with private label alcohol and household products 77
Figure 59: Asia-Pacific consumers are less likely than consumers globally to purchase private label products to save money 79
Figure 60: Consumers from Asia-Pacific are most likely to buy into the benefits of private label products in the personal care category 80
Figure 61: Middle Eastern consumers' propensity to purchase private label products does not necessarily correspond with the level of stated influence of such products 81
Figure 62: MENA consumers slightly favor private label household products over private label personal care variants 82
Figure 63: Consumers' financial situations are still disparate globally despite increasing levels of development in many markets 83
Figure 64: % change in GDP; GDP at Purchasing-power parity 85
Figure 65: HNWI Population, 2005 - 2008 (by Region) 85
Figure 66: Inequality in income - selected countries, Gini coefficient 88
Figure 67: Share of income or consumption, poorest 20% vs. richest 20%, in Europe, by country 89
Figure 68: Share of income or consumption, poorest 20% vs. richest 20%, in the Americas, by country 89
Figure 69: Share of income or consumption, poorest 20% vs. richest 20%, in Asia-Pacific, by country 90
Figure 70: Share of income or consumption, poorest 20% vs. richest 20%, in MENA, by country 90
Figure 71: Most Europeans made greater efforts to save money between August 2008 and April 2009 92
Figure 72: With the exception of a few countries, there was a general reluctance by Europeans to use credit amid the downturn 93
Figure 73: More than one-quarter of European consumers had difficulties paying their bills when asked in April 2009 94
Figure 74: There was a notable increase in the proportion of US consumers who saved more money between the two waves of research 95
Figure 75: Brazilians made a considerable effort to decrease their reliance on credit between August 2008 and April 2009 96
Figure 76: Consumers from the Americas exceeded the global average in terms of the difficulties they faced in paying their bills 96
Figure 77: Australian and South Korean consumers made greater efforts to save more money between August 2008 and April 2009 98
Figure 78: Consumers from India and South Korea made substantial efforts to reduce their reliance of credit 98
Figure 79: One-quarter of Asia-Pacific consumers reported having difficulties paying their monthly bills 99
Figure 80: MENA consumers had a higher propensity to save money compared with the global average 100
Figure 81: Nearly one-third of Saudi Arabian consumers maintained their reliance on credit 100
Figure 82: Over one-third of Middle Eastern consumers reported having difficulties paying their bills at the end of the month 101
Figure 83: Consumers seek to avoid ostentatiousness in their luxury consumption behaviors and focus on the experiential over the material 102
Figure 84: Europeans generally place greater importance on new experiences and challenges over the accumulation of material possessions 103
Figure 85: Europeans are attaching increasing importance to the pursuit of new challenges and experiences 104
Figure 86: Only three-in-10 US consumers consider the accumulation of wealth to be important to them 105
Figure 87: The importance of seeking new experiences has increased profoundly for Brazilian consumers in the past 2 years 106
Figure 88: For consumers in Asia-Pacific. stated importance of wealth accumulation is less than that of new challenges and experiences 107
Figure 89: New experiences are of increasing significance in the emerging economies of Asia-Pacific 107
Figure 90: The past two years has seen the vast majority of MENA consumers attach greater importance to the pursuit of new experiences 108
Figure 91: Member-only luxury shopping websites cater to discreet high-end shoppers 110
Figure 92: There are differences between consumer values and attitudes 111
