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Consumers are increasingly demanding goods and services tailored to their individual needs. This not only includes customised clothing and cars, but also personalised healthcare and nutrition services.

This rise in mass customisation is mainly being driven by advances in technology. The rise of younger consumers who favour unique products and services, plus expanding middle-classes in emerging markets with greater disposable income are also supporting this trend.

Footwear is increasingly being customised, with brand leaders giving a choice of colours besides the fit and design. And nearly all hearing aids today are 3D printed to customer specifications.

Mass customisation is not new, but it is evolving. Digital technologies have lowered production costs, meaning their application is no longer limited to high-value goods.

Technologies such as sophisticated design software and 3D printing allow consumer preferences to be integrated in the manufacturing process, while the internet-of-things, Big Data analytics and artificial intelligence are transforming traditional service industries like healthcare.

The internet spurred trade by reducing transaction costs but newer technologies will have more complex impacts. As technology reduces the need for labour inputs, manufacturing in low-wage countries becomes less important.

People born between 1981 and 1996 now account for around one quarter of the world’s population. Their total annual income is estimated to exceed USD20 trillion in 2035, with millennials in China expected to earn more than those in America.

This more urbanised and tech-savvy generation is leading the way in paying extra for customised goods and services, a trend that will likely be reinforced by those born after 2001, who have grown up in a digitally-connected world.

By 2030, HSBC’s global economists expect emerging economies will account for half of global GDP, while the Brookings Institution estimates that two-thirds of the world’s middle-class will live in the Asia-Pacific. As consumers in these countries become richer they are likely to embrace customisation.

Increasing customisation has implications for global trade patterns and supply-chain configurations. Manufacturing could move from emerging to developed markets to be closer to end-consumers. Technologies like 3D printing could result in components being manufactured locally rather than imported, and may help firms improve speed-to-market and provide the flexibility to adapt quickly to changing demand.

However, customisation has implications for how developing countries participate in global supply chains. Emerging markets that specialise in producing goods that are more amenable to customisation such as clothing could see their trade displaced.

Moving production closer to final-consumers could reduce trade costs such as logistics or tariffs. But barriers to digital trade still remain and tackling issues around data localisation and data privacy will be important in facilitating customisation.

On the other hand, differentiated products could lead to increased trade in items that cannot be sourced or produced domestically. Either way, the rise of customisation has consequences for inventory levels and thus financing.

Technologies are advancing rapidly and customisation will be radically different in the future. Artificial intelligence, for instance, will greatly increase the variety of products and services that can be customised.

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