World Monitor Magazine June #3 - Page 131

additional content its economic potential, because most developing economies depend on domestic consumption to drive economic growth. Most growth markets are eager to facilitate domestic spending, particularly within the new emerging middle class, which is expected to grow from 1.8 billion people worldwide in 2010 to 4.9 billion by 2030, with almost 70 percent of the world’s middle class living in these markets by 2020, as detailed in the report “Rising Middle Class, Global Outlook and Growth Potential,” by PwC and Switzerland Global Enterprise. These emerging consumers are often willing to pay a premium for quality and will drive opportunities across retail, particularly in discretionary and aspirational product categories, including consumer durables, clothing, entertainment and leisure, and automobiles. Increasingly, they are shopping at specialty retail stores. Home and garden retailers, the fastest-growing specialty segment in the top growth markets, has grown by a phenomenal $200 billion since 2009 according to a Euromonitor study from January 2015. Outsiders trying to develop a retail consumer following in these markets, however, have to be aware of the social and cultural norms that are inevitably going to collide with consumer buying habits. In the competitive consumer products market, companies should be prepared to engage new customers in ways that show them how well the product fits into their lives. For the home goods retailer IKEA, for instance, growth countries were the fastest-growing markets in 2016, but it took a lot of planning to achieve local go-to- market excellence. To serve China, for example, IKEA set itself up as an aspirational brand for the growing middle class — as opposed to the mass market that the retailer targets in other parts of the world. Even so, IKEA needed to bring its prices down for Chinese consumers, so the company opened factories in China, increasing local sourcing to 65 percent of volume sales. That local content solved the problem of high import taxes. The company steadily expanded outlets while mounting campaigns on social media and microblogging platforms, building a brand image of family-friendly customer service. These efforts, along with extra-large stores to accommodate China’s large crowds, have created a perception of IKEA, with its inexpensive but fashionable furniture, as practically synonymous with moving into new homes. Even though disposable income levels are increasing, a number of institutional voids are impeding the growth of the retail sector. Weak transport infrastructure and logistical gaps will restrict man