EVEN as consumer confidence in South-east Asia is on track for a rebound across most markets, more people in the region are keeping a closer eye on their expenses, according to a new report released on Tuesday (Oct 10).

About four in 10 respondents from Singapore, Malaysia and Thailand reported a reduction in their spending from 2022 to 2023, up from 32 per cent that said so from 2021 to 2022.

This was one of the key findings of a report by Facebook’s parent company Meta, management consulting firm Bain & Company, and venture capital firm DSG Consumer Partners.

In Indonesia, the Philippines and Vietnam, 38 per cent of respondents said they spent less from 2022 to 2023, up slightly from 36 per cent from 2021 to 2022.

Respondents said they were concerned about economic stability (63 per cent) and the higher cost of living (58 per cent). The largest drop in spending was seen in alcohol, electronics and vacations, while the food, personal care and wellness categories remained resilient, the report noted.

The survey, which sought to examine emerging trends in South-east Asia, saw participation from senior executives at leading consumer product companies as well as 9,000 people in an online poll.

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Among the other notable trends in the report was how consumers in the region were relooking the things they perceived to be needs and wants.

Across income levels, social media was cited as the top essential category, while streaming was listed as a rising essential category. Previous wants such as eating out and buying the latest gadgets or branded apparel were now seen as needs.

Rise of the solo economy

As markets reach an inflection point of growth, consumer segments in the region are evolving and single households are emerging as a key driver, the report found.

While single households make up just 12 per cent of total households in the region, this segment is expected to grow at a compound annual growth rate of 2.4 per cent between 2023 and 2030.

Small households comprising two or three members make up 38 per cent of the region and have a growth rate of 1.2 per cent, while larger households with four or more people account for the remaining 50 per cent and are expected to grow at 0.6 per cent.

In particular, Thailand, Singapore and the Philippines are expected to see a 20 per cent increase in single households by 2030, said the report.

Three key demographics drive the growth of single households in the region: older singles such as divorced or widowed women; ambitious young professionals who delay marriage and parenthood to focus on their careers; and young urban migrants, mostly males in manual or service jobs.

The rise of the solo economy in turn fuelled trends such as increased pet ownership, the emergence of single-serving packaged meals and products, and a rise in entertainment activities such as solo karaoke booths, stated the report.

Artificial intelligence

The report also said that South-east Asia is “well-suited for artificial intelligence (AI) to take off at pace”.

Marketers now leverage AI to tackle region-specific challenges: predominantly in automating customer interactions, data integration and processes; personalising customer journeys across channels; and bridging online and offline experiences.

Benjamin Joe, the vice-president of South-east Asia and emerging markets at Meta, said that AI is powering better experiences for people and better outcomes for businesses.

“With new tools capable of big impact, it’s no surprise that marketers across South-east Asia are already starting to lean into AI to drive more impactful engagement and performance,” he said.

Leveraging opportunities

The report concluded that while business leaders recognise the opportunities in the region, many are not prepared to seize them.

To drive growth in South-east Asia, businesses need to prioritise their ambition for the region, become obsessed with regional consumers, evolve their business models and consumer engagement, and adopt a mindset of causing disruptions and creating change.

Praneeth Yendamuri, partner at Bain, said: “South-east Asia has repeatedly shown its importance as part of investors’ portfolios with significant global valuation and profit and loss impact. To take the region to full potential, bold moves are required.”