The South East Asian region is a rich and highly diverse collection of distinct cultural values and national identities, both of which will influence the development of a new consumer mindset.
Consumers will play a critical role in driving economic growth in the region. Demographic shifts, including rising purchasing power, a younger, better educated population and increased urbanisation, will create a consumer market with distinct needs and strong buying power. The fusion of different social fabrics will open the door for new business opportunities.
Youthful population The region’s population is projected to reach more than 650 million people by 2020, half of which will be aged under 30. Although family-oriented social structures will continue to dominate the South East Asian landscape, an increasing number of people will choose to form a family at a later life stage. The region’s large younger population will have profound impact on future consumption across the region.
Income class transitions
Expected future growth in consumer expenditure indicates increasing maturity of the consumer market across South East Asia. Consumer expenditure growth will substantially exceed historical levels, reaching US$1.5 trillion by 2020. Disposable income levels are expected to increase – but the relative gap across the economies will remain.
Transition of households from low to middle class10 income segments will be the catalyst for future domestic consumption. The relative size of the middle class will help create aggregate purchasing power that will exceed that of the smaller premium income households.
By 2020, middle class households across South East Asia will have an aggregate purchasing power of at least US$0.75 billion as compared to US$0.5 billion offered by households with greater than US$75,000 in annual disposable income.
Despite the healthy growth of the middle class, low-income households will continue to be the backbone of the region’s economy. This dominant segment represents business opportunities that may be realized by adopting innovative and simple business https://www.ciprobuyonline.org models similar to those that have proven to be successful in other emerging markets (e.g., China, India).
The growing affluence of the upper-middle class in more mature economies such as Malaysia and Singapore will become increasingly important for the region in driving demand for high value products and services.
Distinct purchasing needs and expectations
With their growing purchasing power, consumers across the region will have a greater appetite for education, household goods and services, communication and entertainment. Demand for premium products and services are expected to be driven from consumers in more mature markets due to their higher income levels. For example, consumers in Malaysia and Singapore have a higher affinity to spend on high-end consumer electronics and household durables, medical and health-related products, higher education, entertainment and travel.
A large young population will make education the fastest-growing expenditure category across South East Asia. Those aged below 20 will drive demand for primary and secondary education. More than 380 million people are expected to attain at least primary education by 2020, boosting literacy standards across the region. An increased number of adults in the region are also expected to pursue higher education.
The prdontevalence of larger households (four to five people) will continue to drive demand for essentials such as housing, transport and food. With over 40 per cent of the region’s population continuing to live in rural areas, there will be a higher demand for mobile communications, although poor infrastructure in rural Indonesia, the Philippines, Thailand and Vietnam may constrain wired connectivity.
Consumers are also expected to invest in health and financial security due to the lack of a strong social security system in some countries.
In summary, consumers in developing economies will direct a large portion of their disposable income towards improving general living standards, whereas mature markets will show a growing propensity to save and build wealth for the future.