Asia’s sinking middle class
Asia’s sinking middle class: Full Text
As consumer confidence plummets, dismayed marketers rethink strategies to ride out the economic crisis
At first glance, nothing seems to have changed at One Utama, a sprawling shopping mall on the outskirts of Kuala Lumpur. Finding a vacant spot in the cavernous parking lot is as hard as it was a year ago. Inside, young Malaysian couples shop for groceries and kitchenware, while gawky teenagers queue outside a cinema multiplex showing Titanic. The coffee bistro is doing steaming business, and gizmo-aficionados are trying out the latest Palm Pilots.
But the hustle and bustle belie the overall slump in buying activity, especially for big-ticket items. Few middle-class families stroll through the huge Melandas Casa Mobili store, for example, to pick out its Italian furniture, priced at $1,000 and above. Ever since the economic crisis hit Asia last year, business has fallen 50%, says manager F.W. Chan, who sees the gloom continuing for at least another year. A hi-fi music shop further along is equally deserted. Monthly sales have shrunk 80% since last year, and a state-of-the-art, $18,000 system has had no enquiries in over a week. "No customer, lah," the teenage sales assistant says, with a nervous smile.
Worried about the future, Asians are holding on to their money-much to the dismay of Western and domestic companies that have invested heavily in the region in the hopes of ringing up healthy profits. This thrift has compelled companies to rethink marketing strategies, particularly because it's now clear that earlier calculations of the size and growth of the Asian middle classthe core consumers-were probably wide off the mark. "We were very hopeful of our growing middle class," says an Indonesian businessman. "But their disposable incomes have now been reduced to pathetic levels. The whole class is disappearing. What went wrong?"
That's a question that companies in Asia are asking themselves and their expensive marketing
As consumer confidence plummets, dismayed marketers rethink strategies to ride out the economic crisis
At first glance, nothing seems to have changed at One Utama, a sprawling shopping mall on the outskirts of Kuala Lumpur. Finding a vacant spot in the cavernous parking lot is as hard as it was a year ago. Inside, young Malaysian couples shop for groceries and kitchenware, while gawky teenagers queue outside a cinema multiplex showing Titanic. The coffee bistro is doing steaming business, and gizmo-aficionados are trying out the latest Palm Pilots.
But the hustle and bustle belie the overall slump in buying activity, especially for big-ticket items. Few middle-class families stroll through the huge Melandas Casa Mobili store, for example, to pick out its Italian furniture, priced at $1,000 and above. Ever since the economic crisis hit Asia last year, business has fallen 50%, says manager F.W. Chan, who sees the gloom continuing for at least another year. A hi-fi music shop further along is equally deserted. Monthly sales have shrunk 80% since last year, and a state-of-the-art, $18,000 system has had no enquiries in over a week. "No customer, lah," the teenage sales assistant says, with a nervous smile.
Worried about the future, Asians are holding on to their money-much to the dismay of Western and domestic companies that have invested heavily in the region in the hopes of ringing up healthy profits. This thrift has compelled companies to rethink marketing strategies, particularly because it's now clear that earlier calculations of the size and growth of the Asian middle classthe core consumers-were probably wide off the mark. "We were very hopeful of our growing middle class," says an Indonesian businessman. "But their disposable incomes have now been reduced to pathetic levels. The whole class is disappearing. What went wrong?"
That's a question that companies in Asia are asking themselves and their expensive marketing