Trend summary Consumption is a basic fact of life. People need necessities such as food, water, clothing, energy, etc. But they also desire nonessential things – such as travel, personal interactions, information, and entertainment – to enrich their lives. Consumerism changes people’s lives. • People gain access to novel products and services that they could not realistically produce themselves, from fuel to imported food. • Purchasing goods and services frees up time for people to pursue other activities, e.g. purchasing prepared food may free up time for leisure or education. • Consumption styles and habits help define social status, and people around the world are increasingly defined by what and how they purchase. One’s purchasing styles and habits become clues to other people about what one considers important, whether it is the latest Nike shoes or organic food. For some people consumption provides‘a common benchmark to measure personal accomplishment’. • Consumerism can improve peoples’ lives, giving them access to useful products and services. But, at the same time, it also defines the haves and the have-nots which may create personal dissatisfactions and even societal instability. For example, the Chinese Ministry of Labor and Social Security recently reported that the emerging Chinese income gap could create social unrest in the country. • Consumerism stokes the fires of national economies. It is estimated that two new jobs are created for every Chinese-made car that rolls off the production line, and the salaries of these workers fuel other parts of the Chinese economy. 02/2013 myForesight® 18 viewpoints Introduction L Lifestyles that rely on consumer goods and that focus heavily on the acquisition of these goods continue to spread around the world. As this trend unfolds, purchasing power determines social standing in society; and the type, price and brand of consumer goods and/or services becomes the symbol of identity. Globalization and rising incomes encourage consumerism. In developing countries middle class societies are emerging and gaining the financial means to pursue and support consumer lifestyles. The ideological obstacles that once kept consumerism in check in several parts of the world have fallen away in recent decades with the decline of the Soviet Union and China’s change in its economic policy. In developed countries, consumerism continues to evolve. Consumer expectations are rising and, for many people, things that were once considered ‘luxuries’ are becoming ‘necessities’ – e.g., PCs, mobile phones, or international travel. Malaysia could attain developed nation status by 2018, two years earlier than targeted, if economic growth remains at 5.3% to 5.5% in the next four years. Malaysia’s current population of 29.7 million is growing steadily at an annual rate of about 1.8%. Greater Kuala Lumpur is now home to six million people, which is 20% of Malaysian’s population and by the year 2020, there will be 10 million people living in Kuala Lumpur and its surrounding areas. Increased populations mean increased consumption in overall market. The country has seen a steady increase in the standard of living and with it, its purchasing power (per capita income exceeds RM19,739 or US$5,681). BY Mohd Hasan Mohd Saaid [email protected]CONSuMERISM TREND IN MALAYSIA
Transcript
Trend summaryConsumption is a basic fact of life. People neednecessities such as food, water, clothing, energy,etc. But they also desire nonessential things –such as travel, personal interactions, information,and entertainment – to enrich their lives.
Consumerism changes people’s lives.
• People gain access to novel products and servicesthat they could not realistically produce themselves,from fuel to imported food.
• Purchasing goods and services frees up time for people to pursue other activities, e.g. purchasing prepared food may free up time for leisure or education.
• Consumption styles and habits help define socialstatus, and people around the world are increasinglydefined by what and how they purchase. One’s purchasing styles and habits become clues to other people about what one considers important,whether it is the latest Nike shoes or organic food.For some people consumption provides ‘a commonbenchmark to measure personal accomplishment’.
• Consumerism can improve peoples’ lives, giving them access to useful products and services. But, at the same time, it also defines the haves and thehave-nots which may create personal dissatisfactionsand even societal instability. For example, the Chinese Ministry of Labor and Social Security recentlyreported that the emerging Chinese income gap could create social unrest in the country.
• Consumerism stokes the fires of national economies.It is estimated that two new jobs are created for every Chinese-made car that rolls off the productionline, and the salaries of these workers fuel other parts of the Chinese economy.
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Introduction
LLifestyles that rely on consumer goods and that focus heavily on the acquisition of thesegoods continue to spread around the world. As this trend unfolds, purchasing power
determines social standing in society; and the type, price and brand of consumer goods and/orservices becomes the symbol of identity.
Globalization and rising incomes encourage consumerism. In developing countries middle classsocieties are emerging and gaining the financial means to pursue and support consumerlifestyles. The ideological obstacles that once kept consumerism in check in several parts of theworld have fallen away in recent decades with the decline of the Soviet Union and China’s changein its economic policy. In developed countries, consumerism continues to evolve. Consumerexpectations are rising and, for many people, things that were once considered ‘luxuries’ arebecoming ‘necessities’ – e.g., PCs, mobile phones, or international travel.
Malaysia could attain developed nation status by 2018, two years earlier than targeted, ifeconomic growth remains at 5.3% to 5.5% in the next four years. Malaysia’s current populationof 29.7 million is growing steadily at an annual rate of about 1.8%. Greater Kuala Lumpur is nowhome to six million people, which is 20% of Malaysian’s population and by the year 2020, therewill be 10 million people living in Kuala Lumpur and its surrounding areas. Increased populationsmean increased consumption in overall market. The country has seen a steady increase in thestandard of living and with it, its purchasing power (per capita income exceeds RM19,739or US$5,681).
Scale of consumerism The urbanisation rate is expected to increase at acumulative annual growth rate (CAGR) of 1.2 per centbetween 2013 and 2018 in Asia Pacific. InMalaysia, about 2.6 million people are expectedto move from rural to urban areas in Malaysiabetween the same periods.
Urbanization and migration create employmentproblems. However, the unemployment rate inMalaysia has decreased 3.0% in April 2013 whilstthe unemployment rates of developed countries
such as United Kingdom and US are soaring – UK., 7.7%and US., 7.5% – for the same month.
Economists target the levels of inflation in Malaysiato be at 2.5% for 2013, taking into account the currentimplementation of the goods and services tax (GST)and the extension of retirement age to 60 starting1 July 2013.
In recognising the complexities of urbanisationchallenges, government agencies, policy makers andindustry players are formulating more integratedapproach to address the critical issues such as water,environment, waste and city planning in moreholistic way.
The Human Development Report 2013 highlightsMalaysia’s predicament which is seen to be in a‘middle-income trap’. The country is no longer ableto compete with neighboring countries in low-costproduction and lacks the skills for high-end tasks inglobal production networks. Malaysia’s progress isrestrained by inadequate research and developmentcapacity, lack of design and process engineers,and technical and production workers.
Malaysia’s economy isseen to be in a ‘middle-income trap’. The countryis no longer able tocompete with neighboringcountries in low-costproduction and lack theskills for high-end tasks inglobal production networks.
MALAYSIA INFLATION RATEAnnual Change Consumer Price Index
Jul/11 Jan/12 Jul/12
3.5
4
3
2.5
2
1.5
1
3.5
4
3
2.5
2
1.5
1
1.61.4 1.4 1.4 1.4
1.3
1.71.6
1.31.5
1.2
3.3 3.3 3.3
3.53.4 3.4 3.4
3
1.91.8
2.7
2.22.1
Jan/13
Figure 1 MALAYSIA INFLATION RATE: Annual Change Consumer Price Index
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Like everywhere else in the world, the needs ofconsumers in Malaysia evolve and change overthe time.
• Geographic shiftConsumption in urban areas are significantly higher than in rural areas as proportion of urban population increased to 71.0 per cent in 2010compared with 62.0 per cent in 2000, accordingto Department of Statistics Malaysia (DOSM).
• Sustainable consumptionConsumers play an important role in sustainableconsumption. It is hard to fulfill the needs of consumers because they change over a time. What is important today might not be relevantin the next 100 years.
• Redirected consumerismConsumers around the world make their purchasingdecision based on ethical, religious, political, or other beliefs. For example, some Malaysians refuse
to buy Israel products due to Palestine’s issues; consumers in South Korea prefer national brand rather than global brand. It is important to note that this kind of consumerism factor driving the Korea’s economy. To date, Malaysia is unable to duplicate South Korean’s success as Malaysia’s consumerism is driven by western lifestyles.
• Beyond consumerismClimate change awareness and smart technologyinfluence consumers’ behavior and change their consumption culture.
1993/94* 1998/99* 2004/05 2009/10
2,5002,190
190
239
1,953
1,631
1,161
2,000
1,500
1,000
500
0
31101
124
327
2989
495
7548
444
167
213
3892103
314
27838333833333
444304300
5935
3939333
105
209317059
227
298444484
33633633
5630
3636333
78145175324168218848484444218421218421
33636333
4126
27666
Non-alcoholic Food & Beverage
Clothing and Shoes
Home Decoration and Appliance
Transportation
Recreation and Culture
Hotel and Restaurant
Average Monthly Household Expenditure
Alcoholic Beverage and Tobacco
Housing and Utilities
Health Care
Communications
Education
Goods and Services
Trend's relationship to sector
The spread of consumerism in developing countries is helping to foster the idea of the home as anextension of the self and a sign of upward mobility. “California-style” gated communities are poppingup for IT workers in India. It can also mean upgrading functionality in the home, e.g., with modernappliances. In developed countries the home has long been seen in these terms; aesthetics arecentral and people strive for the latest accoutrements.
In Malaysia, analysis by type of housing units shows that consumers prefer terrace / townhouses /cluster houses and flats / apartments / condominiums rather than detached and semi-detachedhouses. Green focus agenda is being adopted in almost all new construction planning.
The use of energy and natural resources rises in parallel with the rise of modern consumerism. Forexample, on the back of its shift towards consumerism China has become the world’s largest marketfor grain, meat, coal, and steel. This growth has also sparked a brisk trade in illegally harvestedlumber, leading to deforestation across Asia.
Generally, Malaysians are aware of energy efficiency. Consumers is Malaysia are looking for betterproducts in term of energy saving and fuel efficiency.
Consumerism Relevance to Business Sectors :
Business sector
Construction
Energy andnatural resources
Figure 2 Household Expenditure Trends, Malaysia 1993 to 2010
Malaysia’s progress isrestrained by inadequateresearch and developmentcapacity, lack of designand process engineers,and technical andproduction workers.
Source: Department of Statistics Malaysia
Change of Consumerism
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Trend's relationship to sector
FMCG help consumers efficiently and easily meet day-to-day needs such as personal care, mealpreparations, and home cleaning. At the same time, they provide consumers with relatively inexpensiveopportunities to purchase branded lifestyle products such as cosmetics and personal care products.
Consumerism in established and emerging markets is often supported by credit. Access to credit is on therise in developing countries, helping to finance consumers’ spending on cars, homes, householdappliances, etc.
Influential financial news magazine, The Economist, has named Malaysia as the world’s most importantIslamic-finance center. Malaysia’s Islamic banking assets growth rate is between 18% and 20% annually.Over the past few years takaful, an Islamic insurance scheme, has enjoyed significant expansion withan estimated average annual growth rate of 25% as apposed to 10.2% for the conventional insurancebetween year 2004 and 2007. Financial planning is becoming essential among Malaysian.
Consumerism means that people look at food not just as a source of calories, but also as a lifestyleproduct and even a mark of personal distinction, e.g., distinguishing oneself by eating ‘modern’packaged foods in the Third world, or Icelandic free-range lamb in the developed countries.
The practice of eating-out has become a trend among urban workers, students and even familiesbecause of work or there is no food available at home. In Malaysia, Halal status has been the mostimportant factor for Muslim consumers.
A rise in consumerism usually means governments will need to tackle questions of marketregulation, product and food safety, and authenticity in advertising. Governments must also decidewhich goods and services (such as phone service or water) are social goods and which are part ofthe market.
Government’s policy and regulation is one of the drivers in consumption trend. For example, byfocusing on green growth, Malaysia can expedite its target to reduce GHG by 40% in 2020 from itslevel in 2005. Malaysia is confident that the services sector will contribute 70% to the gross domesticproduct (GDP) by 2015.
Healthcare is part of the social and government sector in many parts of the world, but in others it is aconsumer service. Lifestyle drugs – prescription drugs that address conditions that are chronic butnot life-threatening – have become popular worldwide. Medical tourism is on the rise as a distinctform of consumer-focused medicine. These and other trends push medicine more towards theconsumer realm. Malaysia is ranked among the top five destinations for medical / health tourism.Factors such as cost-effective treatments, skilled medical professionals and government support aredriving the growth.
There is a big concern on dietary pattern such as eating outside, skipping meals and relying on fastfood. This dietary pattern contributes to non-communicable diseases associated with over nutritionnamely obesity, hypertension, coronary diseases and cancers.
Information technology, primarily the Internet, has become increasingly important to consumerismin recent years. E-commerce, collaborative filtering, eBay, and product research are just a few of theinnovations. Infotech devices have moved from geek to chic, and buying – and using – the latest ITfor some consumers in all three Worlds is a way to attain an air of coolness and modernity.
The numbers of people buying smartphones has increased to 7.7 million in January 2013. Broadbandpenetration in Malaysia increased from 55.6% in 2010 to 66.0% in 2012. Report by McKinsey &Company in 2012 placed Malaysia at third place among countries that enjoyed productivity increasefor SMEs due to web technologies. Sharing information on the internet enable consumers toaccess more options available online. Some consumers are moving towards ‘collaborativeconsumption’ where people make deals or swap things and services over the internet. eGovtinitiatives to transform government services online has increased productivity, specificallytowards a paperless government.
Leisure time is closely linked with consumerism in World 1 and is increasingly in other parts of theworld, with people spending time to go to the movies, travel, buy books, etc. For some people,consumerism itself has become a pastime, e.g., shopping at the mall, bargain hunting, or antiquing.
Business sector
Fast-movingconsumer goods (FMCG)
Financial services
Food and beverage
Government
Health & Medicine
Information technology
Leisure
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Business sector
Media
Mobility
Retail
Asia rising Women’s power
Urbanisation
Rising mobility
Media spread
Cultural flows
Networked world
Electrification
Aging
Cultural multipolarityPopulation growth
Transparency
Migration
Changing families
Time pressure
Social freedom
Ethical Consumption
Monetization
Middle class growth
Consumerism
Trend's relationship to sector
Popular media reinforce the idea of consumerism as a lifestyle and carry the advertising meant todraw consumers to products and services. Consumers in Malaysia now have more access to a mediawhere more people have more variety of sources for information and entertainment throughdifferent devices. Apart from traditional newspapers, magazines and television, sharing informationthrough social media has become a trend. Some consumers prefer smartphones for their desirablefeatures and advance ability in term of media accessibility.
As people embrace consumerism, expectations about transportation change. Personal mobility is aprime component of consumer life in developed countries. The model of personal car ownershipand leisure travel has now been passed on to developing countries and has become theaspirational model for developing countries’s emerging consumer class.
In Malaysia, a family without a car is a rarity. Even students of driving age from middle and uppermiddle class families have their own cars to travel from their residents to colleges or universities.
Formal retail outlets such as hypermarkets and supermarkets that provide one-stop shopping arecommon in developed countries are making inroads into developing countries. The old fashionedsundry shops and street vendors wil soon be things of the past.
Relationships to other TrendsConsumerism interacts with many other trends. The diagram below shows these relationships its closely intertwined and driven by other trendsincluding the rise of middle class, monetization, media spread, ethical shopping, etc.
Source: INNOVARO: Top 20 Trends Consumerism
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Relationships to Other Top 20 Trends
Other Trend
Middle-classgrowth
Monetization
Ethicalconsumption
Social freedom
Time pressure
Asia rising
Women’s power
Urbanization
Relationship toconsumerism
Driver
Mutuallyreinforcing
Outcome
Mutuallyreinforcing
Mutuallyreinforcing
Mutuallyreinforcing
Driver
Mutuallyreinforcing
Relationship description
Over the last century the emergence oflarge middle-income groups in developedcountries societies has gone hand-in-handwith the creation of modern consumerism.Rising middle classes are now helpingspread consumerism to developingcountries.
Monetization gives consumers new optionsfor consumerist identities and pursuits. Therise of consuming classes provides theincentive for businesses to monetize dailyactivities.
Ethical consumption is a specific form ofconsumerism in which people integratepersonal values into their purchasingchoices. Rather than focusing solely onstandard variables such as price and quality,consumers integrate ethical, religious,political, and other beliefs into theirpurchasing decisions, enhancing the tiebetween consumption and identity.
Rising freedom gives people moreeconomic and social room to engage inconsumer lifestyles. At the same time, thenew choices available in consumeristsocieties let people express their socialfreedom as they buy products that helpdefine and differentiate them from theirfellow citizens (e.g., sport cars, hip-hopmusic, organic
Consumerism increases options and theneed to support one’s expenditure withwork, boosting time pressure. At the sametime, the purchase of consumer goods(such as prepared foods) can free up time.
The rise of Asia is creating new demands forconsumer goods and services. At the sametime, the lure of consumer-focused lifestylesis helping drive the rise of Asian economies.
As their position in society improves, women’seconomic options and resources increase. Thismeans that they are able to more directlydrive and direct consumer spending.
Cities expose people to the range of consumerlife, and offer economic opportunities that canboost people’s income, driving consumerspending. At the same time the allure ofconsumer life can draw people in search ofmodern lifestyles to the cities.
Change in the future
Much of future growth in consumerism willbe driven by the expansion of the globalmiddle class in developing countries suchas China, India, Brazil, Russia, and Mexico.
Time-consuming household activities aremonetized in consumer societies, includingfood preparation and childcare. As incomesrise, more and more of consumer lifestyleswill be monetized, e.g., exercise, dogwalking, and shopping.
Developed countries consumers will likelylead the rise in ethical consumption. Asconsumers in developing countries learnmore about ethical consumption, theirchoices may also be shaped by these ideasand will demand products that meet theirdistinct ethical criteria.
Consumer goods will be used more andmore as a way for people in developingcountries to define themselves and expresstheir growing freedom. Countries that areopening up will help spread modernconsumerism further around the world.
Consumers in developing countries will paymore attention to time. They willincreasingly seek products and services toalleviate their rising time pressure.
Asia’s budding consumers will not make thesame choices that people in developedcountries do. Their styles, preferences, andconsumption patterns will contribute to themix of global consumer options – and insome cases influence the choices ofdeveloped countries consumers.
Women’s rising economic and social statuswill be expressed through consumptionchoices, and used to pursue new identityoptions.
The future growth of cities, especially indeveloping countries, will exposeconsumers to a wider variety of consumeroptions than ever before.
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Other Trend
Rising mobility
Media spread
Cultural flows
Networkedworld
Electrification
Relationship toconsumerism
Outcome
Mutuallyreinforcing
Driver
Outcome
Driver
References1. Top 20 Consumerism2. Malaysian Demographic and Economic Trends3. Malaysian Retail Trends4. Malaysia Consumer Life5. Malaysia may be developed nation by 2018, says minister6. Strong ringgit to give Malaysians better purchasing power7. Low Carbon Green Growth Roadmap for Asia and the Pacific8. April CPI up 1.7% on higher food prices
9. MITI confident services sector to contribute 70% of GDPby 2015
10. Malaysia among top 3 in economic impact of Internet study11.Human Development Report 201312.Nutrition Research in Malaysia13.SKMM Handphone Survey 201114. World Economic Forum : Engaging Tomorrow’s Consumer15.World Economic Forum : Consumer Industry Emerging
Trends and Issues
16. ‘Car prices will be cut in stages’17.Retail and Consumer World by PwC18.Charging forward PwC’s 2012 electric vehicle survey 19.Household Use of the Internet Survey 201120.Greater KL To Host 10 Million People, Greener Buildings
In 2020, Says Raja Nong Chik21.Household Expenditure Trends, Department of Statistics
Malaysia
Source : Social Technologies Analysis.
Relationship description
Upgrading personal transportation is aprimary goal for many as their incomes rise,whether that means a motorized scooter fora teen in Vietnam or a minivan for a youngfamily in Mexico.
Media content drives consumerism andnew consumers seek to acquire the radios,TVs, satellite dishes, and other devices thatenable media spread.
Cultural flows expose people in emergingeconomies to the idea of consumer cultureand, in general, give people new consumeridentities to aspire to.
As consumerism spreads, people gain accessto network devices and services.
Electrification enables many new forms ofconsumption, from appliances to mediadevices and new kinds of food.
Change in the future
Consumer spending will spur demand formobility products and services, from carsand traffic management systems to airplanes.
It will become easier to reach consumers inthe future as more are linked to modernmedia streams. But as consumers gain theability to personalize their media, messageswill need to be more closely focused onspecific consumer identities.
Developed countries cultural exports willfind increasing competition from risingpower of developing countries in shapingglobal consumerism.
Nodes in the networked world will increaseas consumerism spreads. Developedcountries will connect in new ways, andmuch of developing countries will connectfor the first time.
Electrification will increase the total pool ofconsumers, and open new opportunities forserving bottom-of-the-pyramid consumers.
