The number of working-age residents in Metro Manila is forecast to rise by more than 29 percent, or 2.5 million, in 15 years, and this demographic fact will compel a rethinking of existing business models to allow for the profitable exploitation of this new age demographic, a global think tank said.
In a report made available to the BusinessMirror, McKinsey Global Institute’s study, entitled “Urban World: The Global Consumers to Watch,” estimated that in Asia, the country’s National Capital Region (NCR) was seen as some of the world’s most densely populated cities filled with young consumers.
This contrasts starkly against a global phenomenon, especially among the more advanced economies, which are forecast to show expanding elderly demographics, even as their working age population decline over the next 15 years.
McKinsey Global Institute estimated the current working class population within the NCR at 8.5 million. The think tank also said Manila and neighboring Jakarta were to report the largest working age population increases from 2016 to 2030.
According to McKinsey,
Manila’s working age population will increase by as much as the entire working age population in Rome today by 2030.
As a result, consumption activities will intensify and hit an estimated $74 billion as the NCR population expands, according to the think tank’s estimates.
The expansion in the demographic space should not only result from the natural birth rate, but also the migration of young people from rural to the more urbanized region in search for higher quality education and career path.
The various local companies were then urged to study the demographic changes in order to adapt to the shifts in the consumer base and to cater successfully to the shifting taste of the consuming population.
“Those of working age in South Asia and Southeast Asia are rising consumer groups where average incomes are still relatively low today but are set to increase; their consumption habits are evolving,” the global business and economic think tank said.
“These consumers are likely to be responsible for a spurt in consumer demand for a broad range of goods and services, similar to the patterns we observe among those of working age in China,” it added.
The Philippines has proven a consumption-driven economy with a record of resiliency against
volatilities in the global economy.
“The Philippines is heavily
dependent on consumption. In fact, we’re 70-percent driven by household spending,” Bank of the Philippine Islands (BPI) research officer Nicholas Antonio Mapa told the BusinessMirror earlier.
Also, McKinsey said the adoption or use of digital technology in companies play a major role in the evolving consumption story in the coming years.
“They [the younger consumers] are very likely to shop around for financial services and buy online…. They have more choices than previous generations. Millennials grew up with the Internet and digital technologies,” the think tank noted.
Aside from having proper technological platforms for options for online purchases, McKinsey said firms must not let go of traditional person-to-person marketing strategies as younger generations tend to value “word-of-mouth” information on products from their peers.
“Cohorts that have grown up in the era of technological connectivity demonstrate some evidence of two shifts in attitude based on McKinsey’s research across industries. One is a propensity to trust their peers when judging whether a good or service is worth buying, rather than relying on information from the companies and organizations that provide them,” the think tank said.
Also, among the observed attitude that firms must look into is the expectation of a fast-delivery system from firms that offer online services and delivery of products.
The think tank said younger consumers have a “desire for immediate delivery of those goods and services… or at least as quickly as possible.”
“Companies should take note and explore whether these attitudes offer new opportunities,” the think tank said.