BOSTON, MA--(Marketwire - June 1, 2010) - Companies that make the most of a set of "megatrends" that strengthened during the Great Recession could benefit from a significant economic opportunity. Nine of these trends are associated with markets larger than $1 trillion and another five power markets larger than $500 billion.
Megatrends are major trends -- such as urbanization or the rise of online communities -- that hold the power to reshape the landscape of economic opportunity and risk. In an ongoing study of 78 of these trends -- tracked since 2005 -- The Boston Consulting Group (BCG) found that, far from being undermined, 62 continued to grow and 23 of these actually strengthened during the Great Recession.
"These results underscore the value of building growth strategies around megatrends, particularly in today's two-speed world, where lower growth will be a fact of life in many markets for the foreseeable future," said Alison Sander, leader of BCG's Center for Sensing and Mining the Future and coauthor of a new BCG Focus report, Megatrends: Tailwinds for Growth in a Low-Growth Environment.
According to Sander, "Too often, companies miss out on megatrend-related opportunities because they assume they've already accounted for them in their plans. Consider the aging of the population, one of the most well-publicized demographic trends there is. Most executives will say they have it covered. But do they really? Are they reimagining their products, services, and business models to gain a disproportionate share of the $700 billion 'silver market'? If they were, wouldn't remote-control devices be easier to use by now?"
Trends That Grew or Strengthened
The 62 trends that continued to grow or even strengthened during the Great Recession represent a huge economic opportunity for those companies that best address them -- 28 of these trends have a current market size of more than $500 billion, and 19 boast a market size of more than $1 trillion.
As expected, demographic trends and technology trends are among those that continued to grow. That health and wellness trends such as the rise of organics and nutraceuticals (dietary supplements with health benefits) continued to grow might be more surprising. In addition, the relatively high rates of economic growth in developing countries have supported continued growth in trends such as urbanization, the rise of the middle class in rapidly developing economies (RDEs), and resource constraints.
Trends that strengthened include trading down, as consumers looked for lower-priced alternatives; the rise of RDE companies both as partners and rivals; and the move to mobile, which accelerated as many consumers gave up their landlines to save money.
Trends That Took a Hit
Sixteen trends were negatively affected during the downturn. Almost all of these were directly related to economic activity.
"Interestingly, seven of these trends have already returned to growth -- for example, international trade and M&A -- and eight others are expected to start growing again soon. Only global warming awareness remains in limbo," said Sander.
Two Important Trend Clusters
The trends that grew can be grouped into ten clusters. Of these, two particularly important clusters are the Asian ascent and e-migration.
Asian Ascent. The strategic importance of Asian markets as sources of future growth -- and of Asian companies as key partners and fierce competitors -- should not be underestimated.
In China, for example, a company currently needs to have a credible presence in 70 markets to have access to 70 percent of the country's middle and affluent classes. By 2020, the same coverage will require a presence in more than 400 markets. Yet today, many Western companies are active only in the coastal cities -- and few have significantly adapted their developed-world value propositions and operating models to appeal to RDE customers.
In India, increasing literacy and education levels -- combined with the fact that 32 percent of the population will be between the ages of 20 and 39 in 2011 -- will sustain the continued growth of a services sector projected to account for 57 percent of GDP by 2012.
E-Migration. The speed at which commerce is shifting from physical to online channels is surprising even experts. It took only five years, for example, for the online share of the North American travel market to explode from 28 percent to 60 percent. And in the music industry, online sales grew from zero to 40 percent of the market in just eight years.
In addition, in a world where GPS-equipped mobile phones can read bar codes and provide instant comparison shopping, retail stores, for example, risk becoming unwitting showrooms for lower-overhead, lower-priced online rivals or for more tech-enabled brick-and-mortar competitors that may be offering a better price that day.
Said Sander, "The question is not whether a megatrend is 'new' but whether your planning has kept up with its growth and development. And keeping abreast of how your critical megatrends are evolving is doubly important because the sometimes exponential growth of megatrends means that the window for response is short."
To receive a copy of the report or arrange an interview with one of the authors, please contact Alexandra Corriveau at +1 212 446 3261 or corriveau.alexandra@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 69 offices in 40 countries. For more information, please visit www.bcg.com.
About BCG's Center for Sensing and Mining the Future
BCG's Center for Sensing and Mining the Future is a critical resource to BCG consultants and clients seeking to sharpen their future vision. It not only tracks more than 100 trends that have the potential to move markets but also collaborates both inside and outside BCG to develop timely perspectives on the evolution, interaction, and strategic implications of megatrends.