The Korea Times

Going it alone: The rise of Asia's solo economy

Asian consumers are expected to account for half of global consumption growth in the next decade, offering a $10 trillion opportunity. However, the increasing spending power of the region's consumers is not only a story of scale, but also one of diversity and shifting preferences and behaviors caused by powerful demographic, social and economic forces.

These discontinuities in consumer behavior are reshaping Asia's consumer markets and leading to new and sometimes surprising choices and spending patterns. In South Korea, one big shift has been the rise of the solo economy and the increasing prevalence of the 'honjok' (a Korean term meaning the kind of people who live alone) lifestyle ― the growing number of people who live, eat and entertain themselves alone.

Across Asia, the average size of households is shrinking, and most countries have experienced a decline in the past 20 years. In South Korea, single households now constitute almost one-third of all households ― an increase of almost 50 percent compared to 15 years ago. This increase in single households has been driven not only by falling birth rates, but also by people delaying major life events, such as getting married and having children.

The rise of the solo economy has been creating new opportunities for companies serving these single consumers. These opportunities are often focused on new forms of entertainment and companionship, including tables for one at restaurants, single-seat karaoke rooms and gym modules designed for use by one person at a time.

At the same time, the single-person lifestyle has also contributed to increased levels of pet ownership. South Korea has seen a 60 percent rise over the last decade, while the number of pets in China has more than doubled in the last five years. Single households also require different products, such as food delivery at home and smaller portions, in the case of packaged food.

The rise of the single household is also encouraging many shifts in urbanization patterns, as demand for more single-unit housing increases. People living alone tend to have more time for themselves, leading to greater demand for various forms of entertainment, especially digital, including: gaming, virtual reality and digital content such as music/video streaming and related applications. In Japan, for example, single households spend between 1.5 times and 3.5 times more on digital content such as videos, music and e-books, than households with more than one person.

Asia also leads the world when it comes to solo travel. A recent YouGov poll of 21,000 respondents in 16 countries found that up to 93 percent of Asian travelers had either traveled solo in the past or were open to the idea. This figure compares with up to 69 percent of respondents from European countries.

Shifting patterns

The increase in single person households is just one strand in a wider story of shifting patterns of Asian consumption, which is identified in the recent McKinsey research report, titled "The trailblazing consumers in Asia propelling growth." It highlights major societal shifts driving new patterns of consumption.

In particular, aging populations in North Asia are expected to drive close to two-thirds of the growth in consumption. Moreover, it's expected that by 2030, more than 90 percent of over-60s in South Korea and Japan will be online. This shift calls for businesses to reassess how they serve these consumers. Companies will likely need to adjust their online presences and reconsider the size of their current physical footprints.

At the other end of the age scale, digital natives ― those born between 1980 and 2012, including members of Generation Z and millennials ― account for over one-third of Asia's consumption. McKinsey research on Generation Z in Asia has found that 20 percent to 30 percent of this generation spends more than six hours a day on their mobile phones, voraciously consuming video content. They are eager for new experiences and twice as likely as Generation X to buy brands that set them apart.

Women's economic empowerment is also changing consumption patterns. If it were to play out to its full potential, this one factor could deliver as much as one-fifth additional consumption growth in Asia. In 2018, McKinsey Global Institute research found that advancing women's equality in Asia―Pacific could add $4.5 trillion a year to the collective GDP.

Companies are embracing these changes and responding to the new patterns of demand. These new patterns include consumers who are increasingly concerned about climate change and willing to pay more for sustainable products, looking for personalization to recognize their unique needs, or have a preference for Asian brands.

These tectonic shifts in the patterns of Asian consumption are, however, likely to be stressed by increasing inequality and the ongoing challenges caused by climate change. Nevertheless, consumers across Asia are changing the way they shop, nest and move. Companies serving these markets are striving to understand these consumers and adjusting their business models accordingly.

This article originally appeared in The Korea Times.