Global consumer trends

Following is an excerpt from a McKinsey Quarterly survey about various changes over the next decade. However pertinent and intuitively valid, these projections are silent on two dimensions. Nothing is said about the future of digital products and the middle class from the developed nations, respectively. The digital goods' likely evolution will marked by defiance of intellectual property rights until the developing countries become themselves generators of digital goods. If what goes on in the US consumer market is an indication for the future, the middle class consumer in the developed nations and the consumers in developing nations will likely be increasingly alike. And, considering their prediction, this might have been the working assumption of the McKinsey consultants. However, the European consumer, given the protectionism in the EU market, looks differently.

A changing consumer landscape

Economic growth in the developing world will usher nearly a billion new consumers into the global market-place over the next decade, as household incomes reach the level (around $5,000) associated with discretionary spending. Although these consumers will have less spending power than do their counterparts in the developed world, they will have similar demands as well as access to global brands. Many industries therefore face polarized markets where premium and no-frills offerings are squeezing middle-of-the-road ones.

This polarization will become a fact of life throughout the materials sector as well. Consider the automotive industry, which is largely concentrated around two kinds of vehicles: high-volume, low-cost models and premium luxury ones. Materials providers will benefit if they can offer auto-makers differentiated products—say, for lighter bodies with improved fuel efficiency. Likewise, specialty providers of high-strength steel and aluminum are harnessing technology to create captive markets among luxury carmakers. Similarly, paper manufacturers have profitable niche opportunities to design innovative packaging for makers of consumer products such as ice cream or potato chips.

In fact, premium niches represent important opportunities for producers of aluminum, paper, and steel as they find themselves squeezed by high input prices, the substitution of materials when customers attempt to slash costs, excess capacity, and tough competition. Winners will increasingly need to play the role of productivity-improvement partner to their customers—by offering services, for example, or helping in areas such as product design.

"Global trends" by Ivo J. H. Bozon, Warren J. Campbell, and Mats Lindstrand