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• 18 Jun 2024
• Cold Call Podcast

How Natural Winemaker Frank Cornelissen Innovated While Staying True to His Brand

In 2018, artisanal Italian vineyard Frank Cornelissen was one of the world’s leading producers of natural wine. But when weather-related conditions damaged that year’s grapes, founder Frank Cornelissen had to decide between staying true to the tenets of natural wine making or breaking with his public beliefs to save that year’s grapes by adding sulfites. Harvard Business School assistant professor Tiona Zuzul discusses the importance of staying true to your company’s principles while remaining flexible enough to welcome progress in the case, Frank Cornelissen: The Great Sulfite Debate.

• Research & Ideas

Central Banks Missed Inflation Red Flags. This Pricing Model Could Help.

The steep inflation that plagued the economy after the COVID-19 pandemic took many economists by surprise. But research by Alberto Cavallo suggests that a different method of tracking prices—a real-time model—could predict future surges better.

What Your Non-Binary Employees Need to Do Their Best Work

How can you break down gender boundaries and support the non-binary people on your team better? A study by Katherine Coffman reveals the motivations and aspirations of non-binary employees, highlighting the need for greater inclusion to unlock the full potential of a diverse workforce.

• 04 Jun 2024

How One Insurtech Firm Formulated a Strategy for Climate Change

The Insurtech firm Hippo was facing two big challenges related to climate change: major loss ratios and rate hikes. The company used technologically empowered services to create its competitive edge, along with providing smart home packages, targeting risk-friendly customers, and using data-driven pricing. But now CEO and president Rick McCathron needed to determine how the firm’s underwriting model could account for the effects of high-intensity weather events. Harvard Business School professor Lauren Cohen discusses how Hippo could adjust its strategy to survive a new era of unprecedented weather catastrophes in his case, “Hippo: Weathering the Storm of the Home Insurance Crisis.”

• 22 Apr 2024

When Does Impact Investing Make the Biggest Impact?

More investors want to back businesses that contribute to social change, but are impact funds the only approach? Research by Shawn Cole, Leslie Jeng, Josh Lerner, Natalia Rigol, and Benjamin Roth challenges long-held assumptions about impact investing and reveals where such funds make the biggest difference.

• 23 Jan 2024

More Than Memes: NFTs Could Be the Next Gen Deed for a Digital World

Non-fungible tokens might seem like a fad approach to selling memes, but the concept could help companies open new markets and build communities. Scott Duke Kominers and Steve Kaczynski go beyond the NFT hype in their book, The Everything Token.

• 12 Sep 2023

How Can Financial Advisors Thrive in Shifting Markets? Diversify, Diversify, Diversify

Financial planners must find new ways to market to tech-savvy millennials and gen Z investors or risk irrelevancy. Research by Marco Di Maggio probes the generational challenges that advisory firms face as baby boomers retire. What will it take to compete in a fintech and crypto world?

• 17 Aug 2023

‘Not a Bunch of Weirdos’: Why Mainstream Investors Buy Crypto

Bitcoin might seem like the preferred tender of conspiracy theorists and criminals, but everyday investors are increasingly embracing crypto. A study of 59 million consumers by Marco Di Maggio and colleagues paints a shockingly ordinary picture of today's cryptocurrency buyer. What do they stand to gain?

• 17 Jul 2023

Money Isn’t Everything: The Dos and Don’ts of Motivating Employees

Dangling bonuses to checked-out employees might only be a Band-Aid solution. Brian Hall shares four research-based incentive strategies—and three perils to avoid—for leaders trying to engage the post-pandemic workforce.

• 20 Jun 2023

Elon Musk’s Twitter Takeover: Lessons in Strategic Change

In late October 2022, Elon Musk officially took Twitter private and became the company’s majority shareholder, finally ending a months-long acquisition saga. He appointed himself CEO and brought in his own team to clean house. Musk needed to take decisive steps to succeed against the major opposition to his leadership from both inside and outside the company. Twitter employees circulated an open letter protesting expected layoffs, advertising agencies advised their clients to pause spending on Twitter, and EU officials considered a broader Twitter ban. What short-term actions should Musk take to stabilize the situation, and how should he approach long-term strategy to turn around Twitter? Harvard Business School assistant professor Andy Wu and co-author Goran Calic, associate professor at McMaster University’s DeGroote School of Business, discuss Twitter as a microcosm for the future of media and information in their case, “Twitter Turnaround and Elon Musk.”

• 06 Jun 2023

The Opioid Crisis, CEO Pay, and Shareholder Activism

In 2020, AmerisourceBergen Corporation, a Fortune 50 company in the drug distribution industry, agreed to settle thousands of lawsuits filed nationwide against the company for its opioid distribution practices, which critics alleged had contributed to the opioid crisis in the US. The $6.6 billion global settlement caused a net loss larger than the cumulative net income earned during the tenure of the company’s CEO, which began in 2011. In addition, AmerisourceBergen’s legal and financial troubles were accompanied by shareholder demands aimed at driving corporate governance changes in companies in the opioid supply chain. Determined to hold the company’s leadership accountable, the shareholders launched a campaign in early 2021 to reject the pay packages of executives. Should the board reduce the executives’ pay, as of means of improving accountability? Or does punishing the AmerisourceBergen executives for paying the settlement ignore the larger issue of a business’s responsibility to society? Harvard Business School professor Suraj Srinivasan discusses executive compensation and shareholder activism in the context of the US opioid crisis in his case, “The Opioid Settlement and Controversy Over CEO Pay at AmerisourceBergen.”

• 16 May 2023
• In Practice

After Silicon Valley Bank's Flameout, What's Next for Entrepreneurs?

Silicon Valley Bank's failure in the face of rising interest rates shook founders and funders across the country. Julia Austin, Jeffrey Bussgang, and Rembrand Koning share key insights for rattled entrepreneurs trying to make sense of the financing landscape.

• 27 Apr 2023

Equity Bank CEO James Mwangi: Transforming Lives with Access to Credit

James Mwangi, CEO of Equity Bank, has transformed lives and livelihoods throughout East and Central Africa by giving impoverished people access to banking accounts and micro loans. He’s been so successful that in 2020 Forbes coined the term “the Mwangi Model.” But can we really have both purpose and profit in a firm? Harvard Business School professor Caroline Elkins, who has spent decades studying Africa, explores how this model has become one that business leaders are seeking to replicate throughout the world in her case, “A Marshall Plan for Africa': James Mwangi and Equity Group Holdings.” As part of a new first-year MBA course at Harvard Business School, this case examines the central question: what is the social purpose of the firm?

• 25 Apr 2023

Using Design Thinking to Invent a Low-Cost Prosthesis for Land Mine Victims

Bhagwan Mahaveer Viklang Sahayata Samiti (BMVSS) is an Indian nonprofit famous for creating low-cost prosthetics, like the Jaipur Foot and the Stanford-Jaipur Knee. Known for its patient-centric culture and its focus on innovation, BMVSS has assisted more than one million people, including many land mine survivors. How can founder D.R. Mehta devise a strategy that will ensure the financial sustainability of BMVSS while sustaining its human impact well into the future? Harvard Business School Dean Srikant Datar discusses the importance of design thinking in ensuring a culture of innovation in his case, “BMVSS: Changing Lives, One Jaipur Limb at a Time.”

• 18 Apr 2023

What Happens When Banks Ditch Coal: The Impact Is 'More Than Anyone Thought'

Bank divestment policies that target coal reduced carbon dioxide emissions, says research by Boris Vallée and Daniel Green. Could the finance industry do even more to confront climate change?

The Best Person to Lead Your Company Doesn't Work There—Yet

Recruiting new executive talent to revive portfolio companies has helped private equity funds outperform major stock indexes, says research by Paul Gompers. Why don't more public companies go beyond their senior executives when looking for top leaders?

• 11 Apr 2023

A Rose by Any Other Name: Supply Chains and Carbon Emissions in the Flower Industry

Headquartered in Kitengela, Kenya, Sian Flowers exports roses to Europe. Because cut flowers have a limited shelf life and consumers want them to retain their appearance for as long as possible, Sian and its distributors used international air cargo to transport them to Amsterdam, where they were sold at auction and trucked to markets across Europe. But when the Covid-19 pandemic caused huge increases in shipping costs, Sian launched experiments to ship roses by ocean using refrigerated containers. The company reduced its costs and cut its carbon emissions, but is a flower that travels halfway around the world truly a “low-carbon rose”? Harvard Business School professors Willy Shih and Mike Toffel debate these questions and more in their case, “Sian Flowers: Fresher by Sea?”

Is Amazon a Retailer, a Tech Firm, or a Media Company? How AI Can Help Investors Decide

More companies are bringing seemingly unrelated businesses together in new ways, challenging traditional stock categories. MarcAntonio Awada and Suraj Srinivasan discuss how applying machine learning to regulatory data could reveal new opportunities for investors.

• 07 Apr 2023

When Celebrity ‘Crypto-Influencers’ Rake in Cash, Investors Lose Big

Kim Kardashian, Lindsay Lohan, and other entertainers have been accused of promoting crypto products on social media without disclosing conflicts. Research by Joseph Pacelli shows what can happen to eager investors who follow them.

• 31 Mar 2023

Can a ‘Basic Bundle’ of Health Insurance Cure Coverage Gaps and Spur Innovation?

One in 10 people in America lack health insurance, resulting in $40 billion of care that goes unpaid each year. Amitabh Chandra and colleagues say ensuring basic coverage for all residents, as other wealthy nations do, could address the most acute needs and unlock efficiency.

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State of the Consumer 2024: What’s now and what’s next

If you think you know consumer behavior, think again. Middle-income consumers are feeling the squeeze and worrying about inflation but aren’t holding back on splurges. Rather than sticking to tight budgets in retirement, aging consumers are splurging too. Speaking of older shoppers, it turns out that the brand loyalty they’ve long been known for is a thing of the past. And young consumers in Asia and the Middle East are more likely than those in Western markets to switch to higher-priced brands.

These are just some of the large-scale shifts taking place in the global consumer landscape. Consumers have continued to defy expectations and behave in atypical ways , keeping consumer goods manufacturers and retailers on their toes. More than ever, companies that cultivate a detailed, up-to-date understanding of today’s and tomorrow’s consumers—who they are, what they want, and where and how they shop—will be best positioned to succeed.

You’re invited

Join us for a discussion of our report, Rescuing the decade: A dual agenda for the consumer goods industry , on June 26 at 10:00 a.m. ET | 4:00 p.m. CET.

In this article, we draw on our ConsumerWise  research to delve into nine trends shaping the global consumer sector and four imperatives to help consumer businesses move from “now” to “next.”

Nine trends defining the global consumer market

To forecast where the global consumer landscape is heading, we surveyed more than 15,000 consumers in 18 markets that together make up 90 percent of global GDP. Their answers revealed surprising nuances about demographic groups, seemingly contradictory consumer behaviors, and categories poised for growth.

Who is the future consumer?

Consumers no longer fit into traditional archetypes. Some of the most influential consumers of tomorrow are currently underserved.

1. Young people in emerging markets. By 2030, 75 percent of consumers in emerging markets will be between the ages of 15 and 34. Our data indicates these consumers may be optimistic about the economy and willing to spend.

Among this group, young consumers aged 18 to 24 in Asian and Middle Eastern nations, such as India and Saudi Arabia, will be particularly important to consumer businesses, given their pent-up demand and willingness to spend. These consumers indicate a strong desire to spend on premium products, so much so that they are up to two times more likely to trade up—meaning opt for higher-priced brands and retailers—than young consumers in advanced economies. They are also up to three times more optimistic about their respective economies (Exhibit 1). This optimism could translate into higher levels of future consumption. It’s worth noting that young consumers in Latin America are actually less likely to trade up than young consumers in other emerging economies.

2. Retired and ready to spend. Longer life expectancies and declining birth rates, particularly in advanced economies, are pushing the global population of people older than 65 to increase at a quicker rate than the population of people younger than that age. 1 “Ageing,” United Nations, accessed May 29, 2024. Yet for all the data relating to aging populations, older consumers are often misunderstood.

Despite the financial constraints that may accompany retirement, aging consumers across all income levels are willing to spend on discretionary items. In experiential categories such as travel, older consumers’ intent to splurge is even higher than that of millennials, who have historically been big travel spenders. High-income baby boomer and Silent Generation consumers (those whose household incomes exceed $100,000) are a sizable cohort in the United States, making up 30 percent of the market—and they’re more likely to spend on discretionary purchases, such as home improvement and gardening, compared with lower-income consumers their age.

In emerging markets, it’s not just younger consumers who are ready to spend but their parents, too. Wealthy aging consumers in emerging markets are more optimistic, expect to spend more on discretionary items, and plan on treating themselves more than wealthy aging consumers in advanced markets. In one of the starkest examples, 42 percent of wealthy aging consumers in emerging markets 2 Forty-two percent of consumers in Brazil, China, India, Mexico, and Saudi Arabia. said they expect to spend more on entertainment, compared with 7 percent of comparable consumers in Europe 3 Throughout this article, we will refer to “Europe” to indicate France, Germany, Italy, Spain, and the United Kingdom. and 11 percent in the United States. We see a similar willingness to spend in categories such as home improvement, airline flights, and hotel stays. Consumer businesses that market exclusively to younger consumers are thus missing out; they ignore wealthy aging consumers at their own risk.

3. The squeezed-but-splurging middle. We expect that cost-of-living increases in advanced economies will continue to put pressure on middle-income consumers. While conventional wisdom would suggest that these consumers will clamp down on discretionary spending as a result, our data reveals something different: instead, middle-income consumers in Europe and the United States say they plan to splurge on discretionary items at a rate that is comparable with that of high-income consumers.

This intent to splurge appears across various categories, including experience-based categories such as travel and dining out, as well as groceries and discretionary goods. Middle-income consumers might typically be expected to delay purchases during economically challenging times, but our research shows that they’re only slightly more inclined to delay purchases than wealthier consumers. They’re also not much more likely to trade down than higher-income consumers.

What will consumers want?

What consumers want is changing too. Weakened brand loyalty, affordability over sustainability, and heightened interest in wellness products and services reflect the preferences and priorities of consumers across ages and geographies.

4. Brand exploration. When they couldn’t find exactly what they needed because of pandemic-era supply chain disruptions, roughly half of consumers  switched products or brands. That behavioral change has proved quite sticky: consumers continue to be open to exploring alternatives, and brand loyalty is fading across demographic groups.

In advanced markets, over a third of consumers have tried different brands, and approximately 40 percent have switched retailers in search of better prices and discounts (Exhibit 2). Inflation and economic uncertainty are almost certainly inducing this behavior.

This weakening of brand loyalty is not limited to a specific age group. In the past, older consumers remained consistently loyal to their preferred brands, but today, they’re just as likely to embrace new brands and retailers. In Europe and the United States, Gen Zers and millennials are only slightly more likely than older consumers to trade down to lower-priced brands and retailers.

One beneficiary of this rampant downtrading is private labels. Thirty-six percent of consumers plan to purchase private-label products more frequently, and 60 percent believe private brands offer equal or better quality.

5. Sustainability: Value upstages values. In recent years, young consumers in our survey data said they prioritized sustainability considerations when making purchases. It wasn’t all talk: in the United States, sales of products with sustainability-related claims  outpaced sales of products without such claims.

While young consumers still say they care about sustainability, they are now making clear trade-offs in the face of economic uncertainty and inflation. In Europe and the United States, fewer Gen Zers and millennials ranked sustainability claims as an important purchasing factor at the beginning of 2024 than in 2023 (Exhibit 3).

Younger consumers aren’t just deprioritizing sustainability in their purchase decisions; they’ve also become less willing to pay a premium for sustainable products. In Europe and the United States, the percentage of young consumers willing to pay a premium for products with sustainability claims declined by up to four percentage points across product categories. Among these consumers, only a very small percentage were willing to pay a premium for personal care and apparel products with sustainability claims.

6. The worldwide wellness wave. We estimate the global wellness market to be worth more than $1.8 trillion , growing 5 to 10 percent annually. 4 “ The trends defining the $1.8 trillion global wellness market in 2024 ,” McKinsey, January 16, 2024. In advanced economies, health and wellness products and services have been in high demand over the past several years. Today, these categories are also growing quickly in emerging markets, and in some cases, growth in intent to spend on health and wellness products in emerging markets is outpacing growth in advanced markets.

In emerging markets such as China, India, and the Middle East, the percentage of consumers who intend to increase their spending on wellness products and services is two to three times higher than in advanced markets such as Canada and the United States (Exhibit 4).

It’s not only Gen Zers and millennials who are propelling growth in this space, but also Gen Xers and baby boomers. To be sure, regional variations appear. According to our research, for example, 63 percent of baby boomers in China intend to spend more on fitness in the near future, while only 4 percent of the same cohort in India plan to do so.

Weight management products and services, in particular, could help induce growth in the wellness sector over the next several years.

By 2035, just over half of the world’s population is projected to be overweight or obese. At the same time, the availability of weight management drugs is expected to grow as more health plans approve coverage, doctors are able to prescribe them for more uses, and doses are made available in pill form. Adoption of these drugs, compared with other weight management solutions (such as dieting or exercise), will depend on cultural norms and beliefs, too. Less than 30 percent of Chinese and UK consumers consider weight loss drugs to be very effective . 5 “ The trends defining the $1.8 trillion global wellness market in 2024 ,” McKinsey, January 16, 2024.

7. Wellness for women. Investments in women’s wellness are also growing . Consumers in both advanced and emerging markets are indicating a greater interest in spending on women’s wellness products and services, as well as on adjacent personal-care categories. We estimate that closing the women’s health gap could be worth $1 trillion annually  by 2040. 6 Kweilin Ellingrud, Lucy Pérez, Anouk Petersen, and Valentina Sartori, Closing the women’s health gap: A $1 trillion opportunity to improve lives and economies , McKinsey Health Institute, January 17, 2024.

A higher percentage of women in emerging markets (48 percent), in fact, indicate an intent to splurge on beauty and personal-care products and fitness, compared with women in advanced markets (27 percent). And young women are especially interested in wellness: Gen Z women across both emerging and advanced markets said they expect to spend more on personal-care goods and services, compared with Gen Xers and baby boomers. As innovation in women’s health continues to push the sector forward, we expect spending to increase as well.

Where will consumers shop?

Knowing what consumers want means little if businesses do not meet consumers where they are. Global migration patterns—both to and from major urban hubs—are changing where consumers spend their time and money in the physical world, while growth in social commerce accounts for new movement in the digital world.

8. The new urban hot spots. In both advanced and emerging markets, people are moving to seek out new opportunities and a better quality of life. In advanced markets like the United States, consumers are moving away from larger cities in the Pacific Northwest and the Northeast to “secondary cities,” or those with populations between 50,000 and 500,000 people. Two-thirds of the fastest-growing US cities are in the South and West. In these cities, the cost of living is lower than in larger cities, and remote work opportunities are plentiful. Millennials, Gen Xers, and boomers are propelling this trend.

Just because US consumers are moving to scaled-down versions of metropolises does not mean they are curtailing their spending: just as many consumers in secondary cities say they plan to splurge as do consumers in the largest American cities. Meanwhile, 1.3 times more consumers in secondary cities say they plan to splurge, compared with US consumers in rural areas.

Emerging markets will continue to see urban-population growth in both megacities and secondary cities as consumers move in search of better economic opportunities and improved well-being. By 2035, for example, 43 percent of the Indian population may reside in urban areas, up from 35 percent in 2018. In China, the percentage of middle-class households is expected to increase in both tier-one and tier-two cities as well as in tier-three and tier-four cities by 2030. And by 2040, there will be 537 million people in African urban centers, making the African urban population the largest in the world.

9. Social commerce takes flight. For several years, China has led the world in the adoption of social commerce, in which consumers browse and buy directly through social media and content creation platforms. Today, social-commerce markets in both China and India continue to mature, while those in other emerging-market countries—such as Brazil, Saudi Arabia, and the United Arab Emirates—are close behind (Exhibit 5). Consumers in these countries consistently spend more on purchases made through social media platforms, compared with consumers in Europe and the United States.

Attempts to grow the social-commerce market  in the West have had limited success. Companies simply may have been too early to embrace this opportunity. We expect social commerce in the United States to expand to $145 billion by 2027, up from $67 billion today. 7 “ Social commerce: The future of how consumers interact with brands ,” McKinsey, October 19, 2022. Gen Zers and millennials are propelling this growth: they make purchases on social media four times more often than older generations do. More than a third of Gen Z and millennial survey respondents said they had made a purchase on social media in the prior three months.

Four imperatives to win the consumer of the future

In light of these nine forward-looking themes, what should consumer companies do? The most successful ones will be those that act on four imperatives:

Build microtargeting capabilities

About quantumblack, ai by mckinsey.

QuantumBlack, McKinsey’s AI arm, helps companies transform using the power of technology, technical expertise, and industry experts. With thousands of practitioners at QuantumBlack (data engineers, data scientists, product managers, designers, and software engineers) and McKinsey (industry and domain experts), we are working to solve the world’s most important AI challenges. QuantumBlack Labs is our center of technology development and client innovation, which has been driving cutting-edge advancements and developments in AI through locations across the globe.

Rather than putting consumers in predefined—and often outdated—boxes, companies should focus on microtargeting to build a richer understanding of consumer preferences. This involves taking a “smart reach” approach , whereby consumer businesses use their consumer data to target specific microsegments of consumers who may demonstrate particular shopping behaviors or preferences. Generative AI can help consumer businesses reach these microsegments  at scale by increasing creative output and automating marketing outreach. Through microtargeting, companies can engage high-potential consumer groups—for example, younger people in emerging markets or wealthy aging individuals—and provide personalized experiences that build brand love and loyalty and propel future purchases.

Invest in wellness

A rise in both consumer interest and purchasing power presents tremendous opportunities in the $1.8 trillion global-consumer-wellness space. Consumer goods leaders have a chance to reevaluate their product development road maps and consider whether they have more opportunities to introduce personalized-wellness products to priority consumer groups. Consumers across the globe want data- and science-backed health and wellness solutions. Best-in-class companies should evaluate opportunities to lean into these offerings and other wellness growth areas (such as women’s health and healthy aging).

Propel the social–digital experience

Companies should take steps to engage with consumers on social media and other digital platforms. This involves identifying the right channels and platforms, creating attractive content, and tailoring strategies to meet evolving consumer needs. This is especially important as industry lines blur (for example, as consumer companies enter the healthcare space and vice versa) and as ecosystems (networks or partnerships that cut across different industries)  become more important.

We see innovative, international companies testing new approaches to social commerce to connect with consumers on a local level. Some are mobilizing local key opinion leaders to precisely target consumers and create viral digital campaigns that resonate with them. Social media and private chats through platforms such as WeChat help to continually engage consumers.

Offer premium products where they matter

Offering premium products in relevant categories can help improve brand loyalty. Consumer brands should identify which categories are ripe for this, such as experiential travel—where splurge activity is common even across middle-income and aging consumers. Conversely, some categories are more suitable for value plays based on trade-down behavior or frequent brand exploration. Integrating loyalty and pricing strategies , instituting pricing tiers, and tailoring product assortments at the local and channel levels are ways that consumer businesses can provide value to consumers, while also managing economic pressures.

In this consumer landscape—one in which standards, complexity, and stakes are all higher—leaders should understand the new nuances that define who the “next” shoppers are, what they care about, and how they shop. These insights, which should then inform strategic category and channel investments, can lead to long-term, profitable growth and sustained competitive advantage.

The authors wish to thank Cait Pearson, Heather Gouinlock, and Keir Sullivan for their contributions to this article.

This article was edited by Alexandra Mondalek, an editor in the New York office.

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