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Amaya Gorostiaga, Former Manager, Advisory Services

Publication Date

April 5, 2011

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The Economic Power of Women

Women represent the largest market opportunity in the world. Globally, they control US$20 trillion in annual consumer spending, and this number could rise to US$28 trillion in the next five years. According to the Boston Consulting Group survey “What Women Want,” this potential would constitute a growth market bigger than those of China and India combined.

These numbers indicate the rise and growing influence of female consumers—a force that companies should not take lightly. In many parts of the world, women’s changing social and economic status is empowering them to acquire greater decision-making power in both their households and in markets as a whole.

Today’s marketplace is being transformed by the fact that globally 1 billion women participate in the workforce—this number will likely grow to 1.2 billion in the next five years. According to the Harvard Business Review, women’s earned income is also rising, growing at 8.1 percent versus 5.8 percent for men. This has tremendous implications for women’s purchasing power.

Additionally, an expanding middle class in many emerging markets has given rise to millions of young women armed with new spending power and the desire to improve their quality of life. This growing middle class is partly fueled by improving gender norms in many parts of the world—a virtuous cycle of economic growth and gender equality that helps to reinforce one another. Goldman Sachs anticipates that these dynamics will be more visible in China, Russia, Vietnam, Mexico, Brazil, Indonesia, India, and the Philippines over the next decade.

That said, companies should think carefully about their household targets as women gain more and more bargaining power at home. These shifting dynamics are predicted to have a number of implications. First, household savings rates are likely to rise. Second, household spending patterns are likely to shift, as women’s spending priorities are shown to be different from men’s with a majority of women more likely to buy goods and services that improve family welfare.

These trends should reshape how companies expand into new markets and how they attract new consumers. A number of industries can capitalize on these trends in both developed and developing markets through proper investments in consumer insight and product design, particularly in the food, fitness, beauty, health, education, consumer durables, financial services, and apparel industries. As companies work to compete in a tough economic environment in a post-recession economy, a stronger focus on women can help them build market share, expand geographically, and gain new consumers.

 

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About the Author(s)

Amaya Gorostiaga, Former Manager, Advisory Services