TrendSights Analysis: Widening Inequality – The consumer spending implications of inequality
Summary
Widening Inequality trend refers to the growing relative gap between an affluent minority and a disadvantaged majority. In developed nations this is associated with stagnating incomes among the disadvantaged while an increasing share of wealth and economic gains go to the already wealthy. This trend has resulted in an increasingly polarized consumer environment where most consumers face increasing economic and financial pressure while a small majority is completely unhindered in their shopping decisions.
Generally speaking, the gap between the affluent and the disadvantaged is growing. This is concerning for FMCG brands. If economic gains increasingly go to the affluent rather than the disadvantaged or the middle class, producers of FMCGs cannot expect economic growth to correspond with increased consumption by the masses. Even as economies grow, incomes of the disadvantaged masses are stagnating and failing to translate into purchases of FMCGs. This not only reduces purchasing power but also reduces consumer confidence. Uncertainty about the future further constricts spending as consumers wonder whether their lot will improve or even deteriorate over time.
Rising inequality affects everyone. Disadvantaged consumers will face increasing financial pressure while affluent consumers will have increasingly large disposable incomes. These disadvantaged consumers, however, represent the vast majority of the population. The reasons for rising inequality span historical, technological, and economic influences. Globalization and the rise of automation are two of the reasons most visible to modern consumers – affecting quality of life and stirring unrest
Firms targeting the masses should seek to provide products that help consumers deal with increasing economic pressure as well as providing affordable aspirational product offerings. Products that offer value for money, such as two-in-one offerings, will help consumers deal with financial stress, while premium products in smaller packages may offer consumers luxury at an affordable price. On the other hand, targeting affluent consumers will involve producing increasingly premium or experimental products, which will entice those consumers with growing disposable incomes.
The report “TrendSights Analysis: Widening Inequality” examines what Widening Inequality means as a trend, why it is important, who are the various consumer segments, and how to best capitalize on those segments. Moreover, this report helps to understand the impacts of Widening Inequality and how consumers are responding to this trend, to Compare the presence of this trend in each industry across the FMCG space, and learn what the key opportunities are and see how major brands accommodate consumers at both ends of the income and wealth spectrum.
Companies mentioned in this report: Ziwipeak, Del Maguey, Geneu, Garnier, Heinz, Magnum, Project Juice, Nescafe, Manni, Saphir.
Scope
– Only 32% of low income consumers globally say their income is increasing compared to 52% of high-income consumers.
– 56% of alcohol consumers say they will either buy cheaper or fewer alcohol products in light of economic or political changes or uncertainty in their country.
– 52% of consumers say they will either buy cheaper or fewer personal care products in light of economic or political changes or uncertainty in their country.
– In the Middle East and Africa, Asia-Pacific, and Latin America over 60% of consumers are very or extremely concerned about their current financial situation.
Reasons to buy
– Understand the impacts of Widening Inequality and how consumers are responding to this trend.
– Compare the presence of this trend in each industry across the FMCG space, and learn what the key opportunities are.
– See how major brands accommodate consumers at both ends of the income and wealth spectrum.
