Urban vs. rural: Asia’s megacities impact demand patterns

Growing numbers of urban consumers

Urban consumers are integral, either directly or indirectly, to the aspirations of most companies investing in Asia. Mass urbanization is a gamechanger for businesses, governments and policy makers because the expansion of urban conurbations is redefining social mobility, supply chains, workforce structures, energy and resource allocation, housing supply and consumption patterns.

 

The enlargement of Asia’s megacities (defined as a city with a population of ten million or more) will create new opportunities and challenges on the route-to-market. Greater concentrations of online-savvy urban consumers will demonstrate higher expectations regarding service delivery, speed and quality, creating new pressures for supply chains. At the same time, private sector innovations will become more closely aligned with urban planning to solve new challenges for citizens at work and at home. 

In 2015-2020, the Southeast Asian urban population is expected to grow by 2.2% annually, similarly to both China and India. An additional eight million people per year will be making the rural to urban migration across Southeast Asia, and this will raise the urbanization rate for the region above 50%.

The Fourth Industrial Revolution: The impact on Real Estate in Southeast Asia, JLL (2016)

Tapping into rural areas

While Asia’s urban centers drive dynamic new patterns of demand, companies seeking to expand their reach across geographies are reaching out to previously untapped rural areas. The broader availability of internet access is empowering rural consumers to purchase products online, bringing them increasingly into the route-to-market equation. 

Accenture noted in its Asia Consumer Product Trends: Implications for Retailers and Manufacturers that consumer product companies across Asia should tailor their investments based on “gaining a better alignment between product development and marketing to tailor channel strategies by segment and identify innovative distribution to reach both rural and urban consumers.”