CHICAGO – World growth is likely to remain subdued over the next few years, with industrial countries struggling to repair household and government balance sheets, and emerging markets weaning themselves off of industrial-country demand. As this clean-up from the Great Recession continues, one thing is clear: the source of global demand in the future will be the billions of consumers in Africa, China, and India. But it will take time to activate that demand, for what is now being produced around the world for industrial-country consumers cannot simply be shipped to emerging-market consumers, especially the poorer ones among them.
If we want to talk about billions of new consumers, rather than the tens of millions who have incomes similar to the middle classes in industrial countries, we must recognize that many emerging-market consumers have much lower incomes than industrial-country consumers, and live in vastly different conditions. Their needs are different, and producers around the world have, until recently, largely ignored them.
But times are changing. Increasingly, producers are focusing on people who, if not at the bottom of the income pyramid, comprise the vast numbers nearer the base.
For example, an Indian company, Godrej, is making an innovative refrigerator targeted at poor villagers. Village women typically are forced to cook multiple times during the day because the food that they prepare in the morning spoils in the heat. They would like to be able to refrigerate uneaten food, which would limit waste as well as time spent cooking. Unfortunately, with electricity supply intermittent even when available, compressor-based electric refrigerators, which consume a lot of power, have not been an option.