The recent economy slowdown in Asian consumer consumption has alarmed businesses that are accustomed to seeing the region as an area of consistently strong growth. As the rate of growth in real GDP per capita in India, China, and various Southeast Asian countries drops, companies wonder where their best opportunities in the region may lie.
One class of consumers, however, shows no signs of being hobbled or intimidated by the region's slowing economies. The upper middle class in these countries has emerged in recent years as a growing economic class and as a vigorous and optimistic consumer sector, with no drop-off in its patterns of consumption. Indeed, upper middle class consumers are actually increasing their spending, and evidence suggests that this trend is likely to continue.
Serving upper middle class consumers is no simple task, however. Because people in this economic class often travel internationally and tend to be very comfortable shopping at online marketplaces, they have sophisticated tastes and high expectations with regard to product selection, buying experience, and after-purchase service. Their standards are derived from exposure to and familiarity with world-class products and retail structures, not primarily from acclimation to and acceptance of local practices and offerings.
Moreover, members of the upper middle class in the Asian region are rapidly becoming dispersed across a greater number of small and medium-size cities, rather than being concentrated in the leading metropolises as before. This poses a challenge for companies trying to reach them successfully.
BCG has identified three practical tactics to help companies successfully serve this demanding but rewarding class of consumers, including using digital tools more effectively, adapting to the global-Asia nexus, and targeting the younger generation of upper middle class consumers. With the right strategy in place, businesses will be prepared to thrive alongside the burgeoning Asian upper middle class.