ASEAN represents a dramatic consumption opportunity in the coming years, driven by four mega-forces: strong demographic trends; rising income levels; geopolitical shifts that are increasing foreign investment; and digital advancements opening new consumer markets. By 2030 there will be eight major consumption themes in ASEAN, including the doubling of consumption and the blurring of the boundaries between premium and value shopping.
Some of these themes will be accelerated by Covid-19, including digital adoption and shifting retail channels. These are the findings of Bain & Company and World Economic Forum’s report, Future of Consumption in Fast-Growth Consumer Markets: ASEAN 2030.
“As ASEAN continues its path as one of the world’s most dynamic consumption environments, private and public-sector leaders will have to take shared accountability to ensure such consumption is inclusive and responsible. Even as we look to addressing the immediate challenges due to Covid-19, I am confident that strategic foresight from this report will contribute to inspiring action and realizing a prosperous long-term future for ASEAN with sustainable benefits for both business and society.” said Zara Ingilizian, Head of Consumer Industries and Future of Consumption Platform, World Economic Forum.
ASEAN is the world’s third most populous economy and is expected to grow over the next decade to become the world’s fourth largest economy overall.
Income levels are rising and regional gross domestic product (GDP) per capita is expected to grow by an annual 4 percent to USD 6,600 in 2030, causing many product categories to reach inflection points where consumption takes off. Domestic consumption, which powers roughly 60 percent of GDP today, is expected to double to USD 4 trillion.
“Over the next decade, ASEAN will see 140 million new consumers, representing 16 percent of the world’s consumers, many of whom will make their first online purchase and buy their first luxury product,” said Praneeth Yendamuri, Bain & Company partner and report co-author.
“Yet, as this growth story plays out, public and private-sector organisations will need to address the immediate Covid-led health and humanitarian crisis and its implications.”
Rapid digital adoption in ASEAN will continue, spurred by digital native consumers, investor funding in technological innovations and government programs to support digital transformation. By 2030, there will be nearly 575 million internet users in the region, and digital will be ubiquitous in the daily consumption journey.
As digital reaches the rural and low-income communities, it will remove barriers that inhibit small business growth and enable delivery of basic services such as healthcare, education and financial services. The Covid-19 pandemic has highlighted the urgency in providing under-served communities with digital access for obtaining health-related information and ordering essentials.
As the consumption landscape evolves over the next decade, public and private-sector leaders will face numerous opportunities and challenges. To unlock the region’s full potential, stakeholders need to get five things right:
- Ensure efficient and effective recovery from Covid-19 on both the health and economic fronts.
- Focus on talent development and socio-economic inclusion: Over the next decade, 40 million people in ASEAN will reach working age, with digitalization disrupting the nature and number of jobs. An estimated 65 percent of children entering primary school this year will end up doing a job that does not currently exist.
- The Covid-19 pandemic will expedite the switch to automated services. It will be critical to create new jobs, reduce the skills gap, and provide access to education, healthcare and nutrition to ensure a competitive and healthy future workforce.
- Upgrade infrastructure to support urbanisation and resource management as rapidly growing demand pressures ASEAN resources.
- Push for open and integrated regulation, with a hyper-local approach as the region stands to gain from a more interconnected ASEAN with improved intraregional flows of goods and services, investments, knowledge and human capital.
“Consumer behaviors are fast evolving, with the young, urban, middle-class consumer of 2030 seeking personalised, value-for-money, social and integrative experiences across online and offline channels,” said Mr. Yendamuri.
“We will see each ASEAN market evolve differently and a ‘multi-local’ approach will remain key for companies hoping to win in this highly diverse region.”
“2020 has been as a challenging year with uncertainties looming due to COVID-19. On the positive side, ASEAN is at a tipping point, both in terms of economic growth and in the human-centric development of its citizens. As the ASEAN growth story plays out over the long-term, accelerating public-private collaborations can unlock the full potential of the region to establish it as a hub of global trade and socio-economic development” said Mayuri Ghosh, Strategy & Public-Private Partnerships, Future of Consumption Platform, World Economic Forum.
Business, government and policy-makers will have increasing influence in the marketplace to guide the region towards a sustainable consumption future. Achieving this vision requires dedicated collaboration across stakeholders, through innovative and inclusive business models supported by a favorable policy environment.
Covid-19 is the first of many trials that will add uncertainty – and expose the weaknesses that need to be addressed. Public-private partnerships are critical to unlock the full potential of ASEAN and to safeguard its growth story as one of the three fastest-growing consumer markets in the world.