Amid rapid changes in the consumer landscape, businesses must stay attuned to emerging trends that challenge traditional insights. Middle-income consumers, while concerned about inflation, continue to spend on discretionary purchases, even splurging in areas like travel and dining. Aging consumers are also willing to spend more freely, defying the stereotype of financial conservatism in retirement. Brand loyalty, long a staple of older generations, is weakening, as even senior shoppers are exploring alternatives. Young consumers in emerging markets, especially in Asia and the Middle East, are shifting towards premium brands, showing optimism in their economies despite global uncertainties.
The evolving demands of consumers reveal significant changes in preferences. Brand loyalty has diminished, with consumers across all age groups trying new products and seeking better deals. Economic pressures have made value more important than sustainability, particularly among younger consumers who once championed eco-friendly purchases. At the same time, the wellness sector is booming, with global consumers increasingly investing in health-related products and services. Women’s wellness, in particular, shows potential for growth, with younger women leading the charge in both advanced and emerging markets.
Where consumers shop is also changing. Migration patterns show shifts from major cities to secondary urban areas, particularly in the U.S., where lower costs of living are attractive. However, spending habits remain consistent, with consumers in these smaller cities just as likely to splurge as those in metropolitan hubs. Additionally, social commerce is rapidly expanding, especially in emerging markets like China and India. Consumers are increasingly making purchases through social media platforms, a trend expected to gain traction in Western markets, particularly among Gen Z and millennials.
To succeed in this dynamic landscape, companies need to adopt four key strategies. According to McKinsey’s “State of the Consumer 2024: What’s now and what’s next”, these four key strategies are:
- Microtargeting Consumers with Personalized Marketing
As traditional consumer archetypes become less relevant, companies must shift to a more granular approach to marketing. Microtargeting involves identifying and segmenting smaller, more specific consumer groups based on their unique behaviors, preferences, and needs. This requires sophisticated data analytics to uncover insights that may not be apparent with broader market analysis.
- Investing in Wellness
The global wellness market, valued at over $1.8 trillion and growing steadily, presents significant opportunities for consumer goods companies. Health-conscious consumers are increasingly seeking products and services that cater to their wellness needs, spanning areas such as fitness, nutrition, and mental well-being. For example, there is rising demand for women’s health products, and closing the gender health gap could be worth $1 trillion by 2040.
- Enhancing the Social-Digital Experience
With the rise of digital and social commerce, companies need to meet consumers where they spend most of their time—on social media and other digital platforms. Social commerce, particularly in emerging markets like China, India, and Brazil, is booming, with consumers increasingly browsing and purchasing directly through social platforms.
- Offering Premium Products Where They Matter
Despite economic pressures, consumers across income levels are demonstrating a willingness to spend on premium products in certain categories, such as travel, wellness, and experiential services. For instance, middle-income consumers, particularly in the U.S. and Europe, are not shying away from splurging on discretionary purchases like dining out or vacations.
In summary, by focusing on microtargeting, wellness investment, digital engagement, and premium product offerings, companies can adapt to the rapidly changing consumer landscape. These strategies will not only help capture market share but also drive long-term, sustainable growth in an increasingly complex and dynamic global economy.
Read the full report by McKinsey here.
