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New York is the second-wealthiest city on earth and it still will be in 2025, according to Nathalie Remy, partner at McKinsey & Co.
Remy’s presentation provided insight on urban growth and how to help brands expand their reach, specifically in terms of mega and middleweight cities, through McKinsey & Co.’s proprietary methodology Cityscope, which helps brands find the growing segments in cities for their products and global growth by category.
McKinsey & Co. differentiates between two types of cities: megacities and middleweights. Megacities have a gross domestic product of about $250 billion, and there will be 60 megacities in 2025. Together these cities will account for a quarter of global wealth.
“The magnitude and pace of change are exploding,” said Remy. “And growth has become a key topic for most companies. These megacities will be key, but there will be hundreds of middleweights.”
The first 400 middleweight cities from the emerging markets combined will generate in less than 15 years a volume of wealth equivalent to the entire U.S. community today.
McKinsey & Co. has developed Cityscope because GDP growth is not a predictor of beauty growth. “Beauty market growth will accelerate and will gain one percentage point on average per year,” said Remy. “At that pace we estimate that the market will reach $540 billion in 2025. The share of emerging markets, which is approximately 40 percent, will go up close to 60 percent in 13 years. So beauty growth is shifting regionally, like economic growth.”
Of course, growth would not be sustainable without targeting individual categories.
“Growth is granular,” she said. “And it’s exactly because mass and prestige are not driven by the same factors, they will not grow the same way across cities. So depending on who you are, you are not going to focus on the same places.”
Despite not having all the answers, Remy said the numbers can provide insight for the future. “As beauty players, cities matter more for you than other categories,” said Remy. “Focusing on cities will be a unique way to accelerate your growth.”