Global trends test brands

12 January 2011

NEW YORK: Sustainability, digital technology and the rising demand for health and wellness products are among the main trends brand owners must address, a study has argued.

Consultancy Capgemini and the Consumer Goods Forum identified 12 global themes which will impact the trading climate, finding the proportion of people living in cities will climb from 50% at present to 70% in 2050.

The "megacities" set to boast a minimum 8m inhabitants include Jakarta, Lagos, Mumbai, New Delhi, New York, Mexico City and Sao Paulo.

One potential consequence of this shift is the advent of smaller store formats carrying a limited inventory, alongside necessitating complex logistical solutions.

Similarly, the ageing societies of the US, Japan, Western Europe and China indicate marketers need to serve the older audience and meet the preferences of younger demographics in developing nations such as India.

Emerging economies will also contain 93% of the middle class by 2030, up on 56% in 2000, and purchasing power parity could treble in these countries during the coming 20 years.

Digitisation is due to exert a profound influence, and more than 2bn shoppers worldwide are forecast to have completed a transaction via mobile phone by 2013, fuelling expectations for a personalised buying experience.

"Keys to success will be selecting the right social communities to effectively interact with the target consumer groups, managing communication on the sites, and determining how the leverage the huge amounts of online consumer data," the report added.

In a parallel transition, the web's share of retail sales may reach between 25% and 30%, enhancing the 4% to 15% range today, requiring the creation of business models to satisfy empowered customers.

"Consumer demands have already increasingly changed in the last few years through the use of new technologies," said Gerd Wolfram, managing director of Metro Systems, the German retailer's IT unit.

"It is time now to sit down with our industry partners and talk about how, by working together, our industry can better serve the 2020 consumer."

Meanwhile, the number of people leading "lifestyles of health and sustainability" should gain ground, with around 41m US citizens, or 19% of the adult population, currently fitting this profile.

Category sales are predicted to nearly quadruple across the next five years, when the US green sector is also likely to expand from $420bn (€325bn; £270bn) in 2010 to $845bn, per the Natural Marketing Institute.

Elsewhere, the scarcity of natural resources, greater regulatory pressure on areas such as international trade and food safety, and the adoption of innovative supply chain capabilities might all prove vital.

"A new generation of globally competitive companies from developing markets will emerge, helping to further solidify their position in the global marketplace," the study continued.

Most powerfully, the rebalancing of economic strength means China's share of GDP, in purchasing power parity terms, is projected to stand at 20.7% in 2020, measured against 13.3% in 2010.

The country is in line to overtake the US as the world's largest market, possibly before 2020, while India could leapfrog Japan into third by 2012.

"The trends highlighted in the report underline the need for even more collaboration among all parties in the value chain as we move through these challenging times," said Nigel Bagley, Unilever's director, industry affairs.

"We should treat this as an opportunity to urgently act through putting in practice new plans and strategies that better suit the changing needs of our consumers."

Data sourced from Capgemini; additional content by Warc staff