Affordability, Value and the Cost of Living: Cities as Hubs of Consumer Spending

June 2023

Cities are hubs for spending, with 80% of expenditure expected to be generated by urban areas in 2023. Spending growth in 2023 will, however, be sluggish, as cost of living challenges force consumers to be more conservative in their expenditure. Over the next 3-4 years, inflation is predicted to fall, shifting the balance of spending back towards non-necessities; however, consumers are likely to display more conscious consumption habits, valuing sustainability and quality over quantity.

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This report comes in PPT.

Key findings

Cities are hubs for consumer spending

Cities are the undisputed leaders when it comes to spending. In 2023, 80% of consumer expenditure globally is expected to be generated by urban areas. Moreover, the average urban consumer is set to spend more than three times more than someone living in a rural area.

Weak growth in urban spending in 2023

In 2023, year-on-year urban consumer expenditure growth is projected to be at its third slowest rate since 2000, due to the ongoing cost of living crisis. Weak spending is expected to have a greater impact on city economies that derive a large share of GDP from consumption.

Urbanites likely to seek value and affordability in 2023

Urban consumers in 2023 will display conservative spending habits, prioritising necessities and cutting back on discretionary expenditure. Discount stores and private label goods will thrive as people emphasise value and affordability; however, affordable indulgences will remain popular. Consumers are also expected to use digital tools to seek bargains and discounts.

Opportunities can be found in emerging/developing Asian cities

While consumer spending will remain weak in 2023, especially in advanced economies, more robust opportunities are likely to be found in Asian cities, thanks to stronger income growth, a rebounding tourism industry and the reopening of the Chinese economy. Asian cities are also expected to provide stronger growth opportunities in the long term.

Subsiding inflation to boost discretionary spending

Inflation is expected to gradually subside by 2026/2027, which should help reignite consumer spending. Reduced cost of living pressures will boost spending on discretionary goods and services; however, consumers are expected to display more conscious consumption and sustainability-inspired habits that favour quality over quantity.


Key findings
Cities are hubs for consumer spending
Cities continue to attract populations as global urbanisation rates surge
Cities are hubs for e-commerce and tech-savvy consumers
Cities are home to the most affluent consumers globally…
…however, income inequality tends to be a greater problem in cities
Inflation to stabilise in 2023, but cost-of-living pressures will dampen on spending
Consumption-focused cities will face greater economic struggles amid sluggish spending
Opportunities for growth can be found in developing and emerging Asian cities
Urban consumers to develop more conservative and budget focused spending habits in 2023
Sa Sa’s discount store image will to help it find its niche among price-sensitive Singaporeans
Spending on non-discretionary items to fall as urban consumers prioritise necessities
Digital solutions are helping consumers to navigate the cost of living crisis
Jisp’s Scan & Save AR app sees a 600% rise in volume of discounts used for branded goods
Despite the tough economy, urbanites still desire affordable indulgences
Pret-a-Manger launches affordable menu to appease indulgence-seeking urbanites
Subsiding inflation will help boost consumer spending in cities; however, risks remain
Cities in Asia Pacific will continue to drive global spending over the medium to long term
Discretionary spending to surge in urban areas amid an improving economic climate
Cities and spending in 2030
Key takeaways
How to win in cities
Evolution of affordability, value and the cost of living in cities


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