The McKinsey Global Institute (MGI) has published a report, which finds that demographic changes are significantly transforming the world’s consumer landscape. It argues that until now, population growth (a rising number of people) was responsible for generating more than half of all global consumption, whereby now – from 2015 to 2030 – this consumption will rely on individuals spending more. This is a big change. The report identifies nine groups of urban consumers, in which three of these will be responsible for half of consumption growth, having the size and spending power to shape global consumer markets. Businesses need to identify the key consumers, where they live, how much they want to spend, and how and what they buy. Consumer markets are currently so varied, with city markets diverging, different cultures emerging and inequality rising in consumer groups meaning that understanding and tracking changes are not only critical, but highly complex.
According to the study, 81% of total consumption and 91% of consumption growth will be led by large cities. However, the uneven growth of cities will play a big part in which areas benefit from this growth in consumption. The report notes ‘The 20 metropolitan areas with the most consumption growth between 2015 and 2030 include seven cities in the United States and six in China. London—the only European city in the top 20—is projected to have the highest consumption growth. By 2030, ten of the 20 top cities for consumption will be in the United States. Western Europe and Japan are projected to have three cities each in the top 20, and China will have two—up from zero today’ (p. 14).
Source: McKinsey Global Institute Report, 2016. Pg 16
The report demonstrates the importance of understanding changes in demography on a global level, in addition to how densely populated urban areas are hubs for change and growth by luring skilled workers and global talent.