8 ways ASEAN consumer habits will change by 2030 – shaped by COVID-19, tech and more

Malaysia

Lingkaran Syed Putra, Mid Valley City, 58000 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia, Kuala Lumpur (Amin Haiqal, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Praneeth Yendamuri, Partner, Bain & Company & Zara Ingilizian, Head of Shaping the Future of Consumption; Member of the Executive Committee, World Economic Forum


  • Over the next decade, ASEAN will become the world’s fourth-largest economy with a roughly $4 trillion USD consumer market. While the entire region will offer abundant growth opportunities, each market will evolve differently.
  • Eight key consumption themes will emerge, some of them accelerated by the COVID-19 pandemic.
  • In particular, COVID-19 is changing shopping behavior, radically speeding up the digital future and making sustainability a harder tradeoff for policymakers in the short-term.

While COVID-19 will cause a significant economic impact with potential GDP contractions in 2020 and likely spilling over to 2021, the long-term fundamentals of the ten Association of Southeast Asian Nations (ASEAN) member states are on the cusp of a tremendous leap forward in socio-economic progress. Over the next decade, the region will be the world’s fourth largest economy, with a $4 trillion USD consumer market. While each of the ten member states will evolve differently, all of them will offer abundant opportunities for growth.

The Future of Consumption in Fast-Growth Consumer Markets, a project in collaboration with Bain & Company, focuses on the emerging markets that comprise more than 40% of the world’s population. After studying China in 2017, India in 2018, for 2019-2020 it turned its attention to ASEAN.

What is the World Economic Forum doing about the coronavirus outbreak?

Responding to the COVID-19 pandemic requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.

Since its launch on 11 March, the Forum’s COVID Action Platform has brought together 1,667 stakeholders from 1,106 businesses and organizations to mitigate the risk and impact of the unprecedented global health emergency that is COVID-19.

The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.

As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.

For now, the ASEAN region is in the throes of the health, humanitarian and economic crisis resulting from the COVID-19 pandemic. A majority of ASEAN CEOs surveyed by Bain in April predict that COVID-related restrictions will last through Q3 and Q4 2020, with economic recovery in mid-2021.

The pandemic has caused noticeable changes in consumer behavior. Some of those changes bring short-term volatility while others will alter consumer relationships and spending patterns in the longer term. Overall, eight consumption themes will emerge across ASEAN, in the post-pandemic world, with slight nuances in each country:

Consumer spending will double, driven by ASEAN’s middle-class boom. While the looming recession triggered by COVID-19 will dampen consumer sentiment and reduce overall spending within the year, this behavior will self-correct as economies move into recovery. The Asian Development Bank (ADB) estimates Southeast Asian annual GDP growth to fall to 1% in 2020 and rebound to 5% in 2021. However, by 2030, 70% of ASEAN population will be middle-class. The middle-class boom will more than double consumption in the region.

Boundaries of premium and value shopping will blur. Consumption behavior has changed significantly as many communities quarantine across ASEAN. Disaster-preparedness categories and daily essentials spiked, while luxury and non-essential spending experienced a dip with a possible slow recovery. Goods focused on convenience and well-being are likely to see high demand persist even post-recovery.

Over the next decade, many of ASEAN’s new consumer class will buy their first luxury product and be willing to pay a premium for convenience, well-being and personalization. At the same time, they will seek more value for money, more than 60% of high-income consumers surveyed by Bain in 2019 rating price as a top purchase criterion.

“ASEAN is poised to become a dramatic consumption opportunity, driven by four mega-forces: strong demographic trends; rising income levels; geopolitical shifts increasing foreign investment; and digital advances opening new consumer markets.”

—Praneeth Yendamuri, Partner, Bain & Company

Digital ubiquity will become the norm. The pandemic is accelerating the digital future, with many consumers making their first digital purchases and existing consumers spending more time online. Across the region, total streaming time over mobile phones grew 60% from 20 January to 11 April this year. In Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, consumers clock an average 4.2 hours of mobile screen time daily, or 1.2 times the global average, with the younger generations spending up to 5 hours, according to a report from Hootsuite. The abundance of information and choice will accentuate consumer repertoire behavior. Bain consumer research finds that roughly 65% will switch brands if their favorites were not available.

Technology will tear down socio-economic walls. The COVID-19 pandemic will accelerate the digital transformation process as governments and businesses strive to provide connectivity and everyday essentials to vulnerable communities. As rural and low-income communities gain access and exposure to similar information as their urban and higher-income counterparts, digital will begin to homogenize consumer behavior. It will remove barriers for small businesses to flourish, enable delivery of basic services such as healthcare and education and provide access to products with better price, quality and assortment. Bain research finds that poor populations will be more financially included, leapfrogging directly to e-wallets at up to three times the current adoption rate by 2030.

 

Local and regional competitive winds will prevail. Fully 80% of Indonesia’s consumers prefer local brands to global brands, especially in food categories. The trend will continue, even in times of crisis, as communities look to #SupportLocal. During COVID-19, local food and beverage conglomerates are also at an advantage, as consumers tend to prefer large, trusted brands – they look for lower prices, availability and security, and prefer brands that offer farm to factory visibility. In a continuing trend, Korean, Japanese and Chinese brands are gaining popularity over western brands. These brands are capturing significant market share – from 57% in the Philippines to 74% in Indonesia in 2019 – in categories such as beauty, fashion and smartphones, according to Euromonitor.

Shoppers will move beyond omni-channel to expect omni-presence. The pandemic is likely to expedite the shift, especially in categories and consumer groups that were previously more resistant to e-commerce. COVID-19 has led older consumers to make their first online grocery purchases, and many enjoy the convenience of home delivery. This is the first step toward a change in channel preferences. Overall, e-commerce is likely to grow at double-digit rates, accounting for roughly 13% of retail by 2030, close to US penetration today, according to research from both Bain and Forrester. While social distancing has taken a toll on offline channels, convenience stores and traditional trade will remain relevant, evolving to offer services beyond retail such as digital financial services or last-mile delivery for e-commerce. For now, though, some small retailers who work on credit and rely on foot traffic will run out of cash and are unlikely to recover if they do not receive support.

Convenience will be the new currency. Two out of three urban consumers in ASEAN rank convenience as one of their top three criteria for purchases, according to a Bain survey. Also, two out of three consumers are willing to give up data privacy for convenience. These findings suggest that there is huge opportunity for “super-apps” and FinTech to streamline across such verticals as shopping and food delivery.

Sustainability will be non-negotiable. While 80% of ASEAN consumers in one Bain offline consumer study said they value sustainability and have made changes to their lifestyle to be more eco-friendly, the pandemic could trigger a short-term reversal of sustainability trends. Cash-strapped governments and businesses across ASEAN are likely to put sustainability goals on the backburner as they focus on jumpstarting the economy. Yet there may be tailwinds that are longer lasting. For example, telework is showing organizations that they can reduce travel, allowing employees greater flexibility and reducing air pollution for a healthier ASEAN in 2030.

ASEAN is poised to become a dramatic consumption opportunity, driven by four mega-forces: strong demographic trends; rising income levels; geopolitical shifts increasing foreign investment; and digital advances opening new consumer markets. Achieving this vision requires dedicated collaboration across stakeholders, through innovative and inclusive business models supported by a favorable policy environment. The private sector will be required to prioritize consumer relationships and sustainability. For its part, the public sector will need to create trade and investor-friendly reforms, invest in socio-economic inclusion through talent development and upgrading infrastructure for a connected and sustainable future. These public-private partnerships are critical to unlock the full potential of ASEAN and to safeguard the region’s future as one of the three fastest-growing consumer markets in the world.

This blog draws from the Insight Report “Future of Consumption in Fast Growth Consumer Markets: ASEAN,” published in June 2020 by the World Economic Forum’s Shaping the Future of Consumption Platform which seeks to advance responsible models of consumption for the benefit of business and society.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

China hails human rights progress amid calls to close detention camps

Closing the gap in accelerating women’s rights: the role of medical students

EU is right place to tackle pandemic, but reform is needed, latest survey finds

Mosquitoes are helping to fight one of the world’s fastest spreading viruses – this is how

Building social good – lessons from an Asian giant

COVID-19 vaccines: MEPs call for more clarity and transparency

How to change the world at Davos

There is no recipe for a healthy mental state

Does the West play the Syrian game in Egypt?

This company is breeding millions of insects in the heart of London

Here’s how to close the $176 billion health financing gap

COVID-19: MEPs free up over €3 billion to support EU healthcare sector

Burundi election countdown amid ‘deteriorating’ human rights situation

Secure 5G networks: Commission endorses EU toolbox and sets out next steps

What lessons to draw from the destruction of Syria

Ozone on track to heal completely in our lifetime, UN environment agency declares on World Day.

Situation in central Mali ‘deteriorating’ as violence, impunity rise, UN rights expert warns

Aung San Suu Kyi defends Myanmar from accusations of genocide, at top UN court

If people aren’t responding to climate warnings, we need to change the message

De-escalation of fighting in Hodeida is key to ‘long-overdue’ restart of Yemen peace talks: UN envoy

Trade protectionism and cartels threaten democracy

Will the outcome of the UK referendum “calm” the financial markets?

What you need to know about the European Green Deal – and what comes next

“Is Europe innovative? Oh, Yes we are very innovative!”, Director General of the European Commission Mr Robert-Jan Smits on another Sting Exclusive

What is true and not true about the new Coronavirus?

EU–US: What is the real exchange in a Free Trade Agreement?

The new EU “fiscal compact” an intimidation for all people

Forget 2009, this is the real credit crisis of our time

CLIMATE CHANGE FOCUS: The fruits of sustainability and decent work

Women in Switzerland have gone on strike – this is why

Monday’s Daily Brief: global homicide figures, neo-Nazi recruitment, Kashmir, and migrants’ plight in USA

Here are 4 ways investors can influence more secure and responsible innovation

An economist explains how to go carbon neutral in our lifetime

These countries are ranked highest – and lowest – for human development

We need to rethink the way we heat ourselves. Here’s why

Human rights breaches in Guinea Conakry and Madagascar

What has changed in the French politico-economic horizon

Countdown To GSMA Mobile World Congress Shanghai 2018 Is On

How innovation from within is transforming International Organizations as well as lives

Human Rights breaches in Russia, Afghanistan and Burkina Faso

Security Council must ‘come together’ to address the plight of children trapped in armed conflict, says UN envoy

International Criminal Court acquits former president Gbagbo of war crimes in Côte d’Ivoire

How Finland is fighting fake news – in the classroom

UN envoy commends successful conclusion of Guinea-Bissau presidential election

How the tech world could make nonprofits a more powerful force

Libya: EU efforts should focus on protecting migrants, MEPs say

High-tech or ‘high-touch’: UK survey gives clues to the jobs of the future

‘This is a time for facts, not fear,’ says WHO chief as COVID-19 virus spreads

Libya: $202 million needed to bring life-saving aid to half a million people hit by humanitarian crisis

FIAT Chrysler: from Geneva Motor show to the World, and back

Parliament adopts InvestEU programme for strategic and innovative investments

INTERVIEW: UN’s top official in North Korea foresees ‘surge’ in humanitarian aid

UK voters sent strong message to May and Corbyn for soft Brexit

Climate changes and the imminent public health crises

EU and China sign landmark agreement protecting European Geographical Indications

The smartest cyber investment is collective action. Here’s why

UN chief underscores value of cooperation with Southeast Asian countries

Resolving Israel-Palestinian conflict, ‘key to sustainable peace’ in the Middle East: Guterres

Young? You should work out the entrepreneurial heart before the mind

Female African coders ‘on the front-line of the battle’ to change gender power relations: UN chief

More Stings?

Trackbacks

  1. […] 8 ways ASEAN consumer habits will change by 2030 – shaped by COVID-19, tech and more  The European Sting “china digital currency when:7d” – Google News […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s