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Status of Cities in 15 Years

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Status of Cities in 15 Years

  1. 1. GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS KASPARAS ADOMAITIS, SENIOR CITY ANALYST UGNE SALTENYTE, CITY ANALYST
  2. 2. WHY ARE CITIES IMPORTANT? GROWING ROLE OF CITIES SUB-NATIONAL DIFFERENCES THREE KEY TAKEAWAYS
  3. 3. © Euromonitor International 3 Country (emerging markets) Urban extents (sq km) % Total land area in urban extents % of total population in urban extents China 380,588 4% 50% Indonesia 42,204 2% 36% India 223,398 7% 28% Nigeria 17,298 2% 33% 50% of China’s 1 billion+ population lives in only 400,000 sq km – area equivalent to Sweden As urbanisation rate is higher and urban sprawl more pervasive, urbanised areas generally cover larger share of land mass in developed countries GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS Country (developed world) Urban extents (sq km) % Total land area in urban extents % of total population in urban extents USA 794,416 9% 85% UK 60,054 24% 85% Japan 108,927 29% 80% Germany 62,513 18% 70% Urban world: small land areas are home to huge consumer markets Source: NASA Socioeconomic Data and Applications Center (SEDAC)
  4. 4. © Euromonitor International 4 It pays off to focus on key cities: in most markets, growth of consumer expenditure in largest cities will outpace country growth In Sub-Saharan countries (Kenya, Cameroon, South Africa, Nigeria), the growth in dominance of major cities will be particularly fast: their share in total country consumer spending will rise by 5-8 percentage points Growing role of major cities in emerging markets Currently important cities will only grow in importance over 2014-2030 GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS -2% 0% 2% 4% 6% 8% 10% Mexico Brazil Philippines Pakistan Iran Argentina Egypt Azerbaijan Chile Saudi Arabia Poland Bolivia Colombia Romania India China Average Malaysia Morocco Nigeria Russia Indonesia Turkey United Arab Emirates Jordan South Africa Vietnam Kenya Cameroon Belarus Thailand Share of five major cities in total country consumer expenditure, % change over 2014-2030 Emerging markets
  5. 5. © Euromonitor International 5 India Brazil Benefits of market growth can be captured by focusing on a few locations in a country Contribution to growth in consumer spending by city (2014-2030) GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS Total country growth: US$1,6 trillion Total growth in 20 key cities: US$350 billion 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Growthinconsumerspending,US$million, constantvalueterms Total country growth: US$760 billion Total growth in 20 key cities: US$340 billion 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Only a small number of locations can account for substantial share of market growth. In India, only 20 locations will add up to 22% of total country growth. In Brazil, 20 cities will account for 45% of total country growth.
  6. 6. © Euromonitor International 6 Emerging economies are attractive for investment as rapidly growing consumer markets; At the same time, emerging markets face huge inequality between sub-national regions, making some areas substantially more attractive over others; Due to regional inequality, a few well-developed cities/dense urban conglomerations in emerging markets can even show spending patterns similar to developed world, while the rest of the country is struggling with poverty. Sub-national differences matter World’s countries with largest regional differences GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS Brazil India Turkey 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Consumerexpenditurepercapita, US$,2014 0 500 1,000 1,500 2,000 2,500 3,000 0 2,000 4,000 6,000 8,000 10,000 12,000
  7. 7. © Euromonitor International 7 Bangalore (most affluent) Varanasi (least affluent) Total population, (million, 2014) 9.3 1.5 Forecast population growth (total growth over 2014-2030, %) 47 20 Population aged 0-14 (% of total, 2014) 23 32 Number of households with income over US$55,000 (2014) 75,000 1,100 Average expenditure per capita, (US$, 2014) 2,694 556 Spending on food and drinks (% of total, 2014) 23 35 Possession of washing machine, (% of households, 2014) 26 2.5 Possession of car (% of households, 2014) 22 9.2 Possession of Internet enabled PC (% of households, 2014) 37 22 Five fold difference in consumer expenditure per capita Different demographics (see pop aged 0-14) reveal different sources of population growth (immigration in Bangalore vs natural growth in Varanasi) Ownership of cars and access to internet reveal completely different lifestyles Illustrating city-level differences: India GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS
  8. 8. © Euromonitor International 8 Developed countries face lower regional inequality, yet the differences still can be easily observed; In world’s countries with lowest inter-regional differences, France, Germany and Japan, less affluent cities reach only 70-76% of per capita consumer spending level of the most affluent city Sub-national differences matter even in relatively homogenous markets World’s countries with lowest regional differences GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS France Germany Japan 0 5,000 10,000 15,000 20,000 25,000 30,000 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 0 5,000 10,000 15,000 20,000 25,000 30,000 Consumerexpenditurepercapita, US$,2014
  9. 9. © Euromonitor International 9 Paris (most affluent) Lille (least affluent) Total population, (million, 2014) 12 1.4 Forecast population growth (total growth over 2014-2030, %) 6.3 3.9 Population aged 0-14 (% of total, 2014) 20 20 Number of households with income over US$55,000 (2014) 3,022,000 249,900 Average expenditure per capita, (US$, 2014) 28,277 21,707 Spending on food and drinks (% of total, 2014) 13 14 Possession of washing machine, (% of households, 2014) 94 97 Possession of car (% of households, 2014) 67 81 Possession of Internet enabled PC (% of households, 2014) 90 80 Expenditure per capita in Lille is only 77% of expenditure per capita in Paris Despite high consumer income in Paris, ownership of passenger cars is considerably lower in the city Lille metropolitan area is growing at considerably lower rate than Paris, the country’s leading city Illustrating city-level differences: France GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS
  10. 10. © Euromonitor International 10 Urbanisation and economic growth generally means world’s major cities economically will become even more important over next 15 years, as they continue to concentrate population and income. Even in large countries it can pay-off to focus on several major cities. For example, in Brazil and India, doing business in merely 20 locations will help to 25-50% of total market growth. Inter-regional differences in emerging markets can be particularly large in terms of consumer expenditure patterns, population demographics, or household lifestyle. Three key takeaways: why are cities important? GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS
  11. 11. THANK YOU FOR YOUR ATTENTION About Euromonitor International Euromonitor International is the world’s leading provider for global business intelligence and strategic market analysis. As an independent company, it offers unmatched detail and unbiased content for every region, country, category and channel. About Passport Cities New cities data highlights demographics and patterns of consumer spending in 1,150 major cities globally, and dives into penetration of basic consumer appliances and technology items in urban households. To learn more about Euromonitor International’s Cities research please visit: http://go.euromonitor.com/PassportCities- Home.html

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