As a senior communications manager at an advertising company, Rom Molyka enjoys spending her disposable income on shopping, eating out and traveling.
The 23-year-old from Phnom Penh is part of an emerging young middle class in Cambodia, described in a new report released today that gives detailed insight into the country’s changing consumer landscape.
“Opportunities for Consumer Goods in Cambodia” found Cambodia’s young population has created a new generation of aspirational consumers who want to enjoy the trappings of success.
“They want to live like the world they see through their smartphones: individual, independent but family-orientated, self-directed, and with all the choices and accoutrements of a middle-income society,” says the report, which is based on a study commissioned by the British Chamber of Commerce, the European Chamber of Commerce and the U.K. government’s department for international trade.
Income levels, the report notes, are “rising across all socio-economic classes,” with an estimated 10 percent of Cambodian households having incomes of more than $800 a month.
Ms. Molyka, who lives with her family in a household earning a combined income of between $4,000 and $5,000 per month, said she had witnessed the rise of higher-cost consumerism in Cambodia.
“I noticed that since Aeon Mall has opened, it has really set a higher standard of living for Cambodian people,” she said. “We used to see a bowl of noodles for only $2 maximum on the street. Now in the mall, you cannot purchase anything if you don’t have at least $5.”
“Like it or not, you need to have money to enjoy the privileged scene that people in the city do,” she said.
Brands that can be seen to confer status are important to this new middle-class consumer segment, who will “spend money on an expensive new smartphone, automobile or motorcycle.
Looking good is important and they spend money on clothes and personal grooming,” says the study, which is based on interviews with senior business executives and consumers, combined with observational research and secondary research utilizing currently available data on household income.
It is not just the middle class that is benefiting from Cambodia’s fast-growing economy, the report adds. It identified three categories of Cambodian consumers—including the rising “Middle Class” segment—with different types of brands and products appealing to each band.
“A small but significant group of highly affluent families have emerged, of particular interest to luxury goods sellers,” the report says, calling this elite segment “New Wealth.”
New Wealth consumers fuel the market for prestige products such as luxury cars and expensive jewellery as the first generation to experience wealth, which they “want to feel—and display to others.”
Even the segment classed as “Lower Income”—the 62 percent of Cambodians who live on household incomes of less than $400 a month—are better off than before, the report argues.
“In remote rural villages, subsistence farmers now have income for the first time in their lives,” the report says.
“Many families get money from their children—daughters who work in the garment industry or sons in construction or working abroad…most families have a TV,” it says.
The development of distinct groups of consumers is likely to continue and drive economic growth, said Chris McCarthy CEO of Mango Tango Asia, the company that conducted the research.
“The more there is growth, the more people will move into the growing economy; more businesses will start, there will be more specialization and more places to spend money—and this is in turn creates more jobs and opportunity for people to make money,” he said. “In the future we’d expect more people to move into the middle class.”
Todd Hunkin, research manager of social and marketing research company Market Strategy & Development, said there had been an increase in the availability of premium goods over the past few years—especially in the food and beverage, health care and entertainment sectors—that was largely driven by demand from the burgeoning middle class.
Not everyone is enamored with this shift in consumer spending, however, which has seen consumerism overtaking traditional Cambodian spending patterns.
Lim Guech Eng, an accountant at a legal firm in Phnom Penh, said she did not like branded products.
“They are too expensive. Materialist people value things more than people,” she said.
And Chou Ngeth, a senior consultant at Emerging Markets Consulting, said consumerism might be good for a producing economy, but not for an import-based economy such as Cambodia’s.
“It has many negative effects,” he said, citing a lack of job generation and increased consumer borrowing from foreign lenders.
Based on a survey conducted by Standard & Poor’s Financial Services, only 18 per cent of Cambodians have basic financial literacy.
“This could easily make them become over-indebted,” Mr. Ngeth said.
© 2017, All rights reserved.