Internationally-Focussed Island businesses urged to respond to changing face of consumer demand

Businesses in Jersey, Guernsey and the Isle of Man with international aspirations will have to adapt and place a greater focus on transparency, digital innovation and changing consumer demographics around the world, according to a new report from HSBC Commercial Banking.

The report, entitled ‘The Future of Consumer Demand’, suggests that businesses trading internationally will need to start preparing now in order to keep up with consumer patterns and highlights that economic growth is set to propel more than 90% of the world’s population into the so-called ‘consumer class’ by 2020.

Compiled by futures consultancy Trajectory, who drew from in-depth interviews with business leaders plus surveys spanning 90,000 consumers, the report identifies four major trends that will shape the way businesses go to market: 

• Rapid increase in the number of middle income consumers:  defined as those earning USD10-20 per day, middle income consumers currently account for one in seven of the global population. By 2020 this is forecast to grow to 3.2bn, rising to 4.9bn a decade later. This will have a significant impact on company strategies in Asia, where the majority will live.
• Advances in digital technology: rapid growth in the number of people who are online, especially those with the mobile devices, means shoppers are enjoying greater choice, wider networks and the ability to be more discerning than ever before. By 2020 some 6.1 billion people will use a smartphone.
• The different generations are displaying increasingly distinctive consumption patterns: by 2020 the over-60s age group will outnumber the under-5s for the first time in human history.
• Female purchasing power is rising as more women join the workforce: with their earnings set to rise to USD18trn by 2018 from USD12trn in 2010, businesses wanting to target this segment need to adopt an approach that reflects women’s increasingly work-oriented lifestyles.

With firms in the Channel Islands and Isle of Man looking increasingly to extend their overseas business beyond the UK and Europe to markets such as the Middle and Far East, there is a growing need for them to understand how trends in those markets will present new opportunities and pose threats to some established marketing strategies. The study found, for instance, that:

• In the United Arab Emirates, consumers value both work and leisure, and have very high levels of annual leave, with an average of almost four short breaks a year. UAE consumers have a high consumption of brands they consider fashionable, as well as a desire to try new products and services, suggesting this is a fast-moving dynamic market in which consumers have a high expectation of products and services. 4 in 10 had bought something via mobile in the past month – some of the highest levels of m-Commerce seen in the study.
• In China, the population rated work as slightly more important than leisure, has strong brand-related preferences, and relatively high levels of trust. The Chinese have a high consumption of fashionable brands compared to other countries and high levels of purchasing products via their mobile. The activity Chinese digital users were most likely to do online was buying clothes (73% of respondents), closely followed by online banking (71%).

Ewan Stirling, CEO HSBC Channel Islands and Isle of Man, said: “Businesses in the Channel Islands and Isle of Man are increasingly reliant on overseas markets for business growth and in many cases this involves setting up offices in regions such as Asia and Gulf states. These forward thinking businesses need to be aware of how consumer demand and expectations are changing, particularly in the digital space, so they can respond positively. The status quo will not last, so now is the time for companies to show customers and investors alike that they are alert, innovative and imaginative.”