Shifting demographics, millennial power, and the rise of renewables – a broad range of powerful themes emerged from a week of discussion, debate and analysis at Abraaj Week 2017.
Hundreds of delegates, partners and participants joined our esteemed international panelists to share insights on the key trends and challenges impacting growth markets today.
Millennials Driving Market Growth
Throughout Abraaj Week, we saw intense discussion on the increasing role the millennial generation has in shaping the investment outlook, specifically in growth markets where the average age is a decade or more younger than in developed markets. With a growing millennial demographic across the world, this driver is not confined to the growth markets – but has a marked impact in the markets in which we operate given demographics, increasing urbanization and an educated aspirational consumer class.
It’s vital for businesses to understand how to reach these younger markets through social media and new digital marketing techniques, but also how to service them effectively with a focus on speed and convenience.
Responding to the increasing demands of young people in growth markets is a challenge for business – but those companies that can be agile, respond quickly and integrate the needs of this generation into their business models, will be the winners.
A Focus on Tier 2 Cities
Urbanization continues to be a trend throughout growth markets, but it is now the smaller, second and third tier cities that are coming to the fore as buoyant targets for investment, specifically Latin America, Turkey and Asia.
These rapidly expanding urban centers present an incredible market opportunity with fast growing populations, a younger workforce and a density of consumers that typify urban growth today.
Second and third tier cities deliver strong ROI and are the markets often not yet in the sights of large multinationals. Our panelists from Mexico to India echoed this theme, based on their own positive experiences.
Local is the New Global
As the concept and practice of globalism is called into question, consumers too are demanding an alternative approach to service and product delivery, one that is localized and adapted to specific consumer nuances. For those investors wanting to come out on top in growth markets they need a clear point of differentiation to stay ahead of the pack.
For one successful growth market retailer, the solution to this drive for local differentiation is in relentless production innovation, ensuring there is a bespoke local product for each micro-market. This company has created a network of local sourcing partners who become part of an embedded eco-system and support their local ambitions and future growth.
Driving Inclusive Growth
The increasing relevance of the Sustainable Development Goals (SDGs) to business is a theme that resonated across numerous sessions at Abraaj Week. Many SDG targets like those relating to improving health and education not only require action from the private sector, but are promising investment opportunities.
We are now seeing a gradual trend where some businesses are embracing sustainability, pivoting their approach to a longer-term vision, rather than a short term returns-based view. For these companies, embracing the SDGs does not have to mean sacrificing financial returns or market success. The acceleration of that trend will increase the likelihood that we can meet SDG goals by 2030.
Entrepreneurs need to define their sustainability goals early, integrating them into the heart of the business offer. More companies and businesses in growth markets are integrating inclusiveness into their structures – led by a new breed of leader that see themselves as accountable and inclusive.
Renewables Go Mainstream
The integration of renewables into a future energy vision was a dominant theme in our energy panels. There is a need for alternative approaches to financing in the sector, driven by the differing demands of local and country markets, coupled with the need to integrate legacy infrastructure.
Advancements in technology are ensuring that renewables are playing a greater part in energy supply across growth markets. This is not only to be seen in energy generation and supply, but also in its delivery; technology barely conceived of five years ago now allows renewables to be better integrated into the distribution grid.