New Year brings major new opportunities

Consumer demand

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Index Dec11a.pngHuman beings are by nature optimistic. Otherwise our ancestors wouldn’t have bothered to climb out of the swamps, all those years ago, in the hope there was ‘something better’ to be found.

Equally, we don’t usually give up at the first sign that something has gone wrong. We assume that a way will be found to get past the problem. This means we don’t waste time on temporary problems.

But every now and then, the paradigm does shift. If we don’t recognise these moments, we will instead spend our time banging our heads against a brick wall. No matter what we do, our world will not return to how it was.

The blog strongly believes today is one of those moments.

The regular IeC Boom/Gloom Index chart above is a small illustration. It shows:

• The Index (blue column) remains in negative territory
• It is back at levels seen when the crisis began to develop in 2008-9
• The reading for Austerity (red line) continues to climb

Change is not necessarily a bad thing. It may be uncomfortable at the time, but it also brings opportunities. And there are major opportunities ahead:

29% of the rich Western population are now in the New Old generation of 55+ years. Yet just a century ago, Western life expectancy was only 46 years. It was still only 66 years in 1950. Today, these 272 million people can expect to live until they are 80.
• Billions of people in the developing world are emerging from poverty for the first time. They need the essentials of life – food, water, hygiene, shelter and transport. A century ago, their life expectancy was just 26 years. It was only 44 years in 1950. Today, it is 64 years, and still rising.

The blog’s New Year outlook is very simple. It believes it is a waste of time and energy to keep hoping that things will ‘return to normal’ in another 6 months. They won’t, and we might as well recognise this.

Instead, as we discuss in ‘Boom, Gloom and the New Normal’, demographics drive demand and the global economy.

The Western BabyBoomers (those born between 1946-70) drove the Boom years as they moved into the Wealth Creator 25 – 54 age group. But now they are leaving it. The average Boomer will be 54 this year.

Nor can we expect China or India to easily replace their demand. Their ‘middle classes’ have an income of just $2-$20/day. They would be below the ‘poverty line’ in the West.

This is why the paradigm has changed.

Yet very few companies have recognised this shift. Even fewer have begun to develop products and services for Westerners in the New Old generation, or for those emerging from poverty in the developing countries. These two groups of people are dramatically under-served in today’s economy.

Great companies focus on the future, not the past. This enables them to survive wars, depressions and periods of near-disaster. The blog passionately believes that the great companies of tomorrow will be those who focus on these new opportunities.

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