To recover from the COVID-19 shock, tech companies can appeal to older consumers—those who have money but choose not to spend it on the latest tech.
For companies that sell consumer electronics devices—from laptops and smartphones to smart TVs and wearable tech—the COVID-19 pandemic has created both supply and demand shocks. Shutdowns have cut corporate revenue and led to record U.S. unemployment, and growth is expected to remain subdued as the crisis continues. To recover and survive, companies need consumers to look beyond the continued economic uncertainty and buy new devices.
For tech companies, this requires convincing consumers 55 and older, whom Deloitte classifies as “boomers” and “matures,” to upgrade their current devices and try new ones. Older consumers have money to spend and are less concerned than others about making ends meet, according to the biweekly “Deloitte State of the Consumer Tracker” survey.
Only 9% of boomers (ages 55-72) and matures (ages 73+) say they worry about making upcoming payments, compared with 38% of Gen Z and millennials and 34% of Gen X consumers. And at a time of enormous economic uncertainty, only 27% of older consumers are delaying making large purchases, compared with almost half of those under 55.
In short, boomers and matures are willing to spend now on goods and services that matter to them. Unfortunately for consumer tech companies, new devices are low on the list. Deloitte asked U.S. consumers whether they plan to spend more on electronics over the next four weeks compared with the last four weeks. The figures in the right-hand column show the percentage of consumers in each age range that selected “somewhat/a lot more” minus the percentage of respondents who selected “somewhat/a lot less.” The upshot: A net 31% of boomers and matures plan to spend less on electronics in the coming month. This net negative purchasing outlook has been consistent for several weeks—and it represents a challenge for tech companies looking to recover from the COVID-19 shock.
In Deloitte’s “Connectivity and Mobile Trends Survey,” we noted the disconnect between consumer tech companies and older consumers. For example, although 92% of boomers have a smartphone, 43% haven’t upgraded theirs in the last two years—and 58% of boomers have no plans to buy or upgrade in the next two years. Matures are even less likely to upgrade.
Gen Z and millennials, plugged in to a broader range of technologies, plan to increase their spending on electronics in the coming month. But counting on younger consumers to keep tech companies afloat is a risky strategy: With less wealth and job security—especially at this unsettled time—they’re the most concerned about making their payments, and many are putting off large purchases such as pricey new devices.
During the pandemic, consumers of all ages are finding themselves more reliant than ever on tech for connections: to family and friends, to entertainment, even to doctors. Tech companies can make a persuasive case that fitness trackers, smart home speakers, upgraded smartphones, and other devices can help boomers and matures be more self-reliant and less isolated—and it’s a case those companies need to make.
—by Jeff Loucks, executive director of Deloitte’s Center for Technology, Media, & Telecommunications, Deloitte Services LP; and Girija Krishnamurthy, principal, Deloitte Consulting LLP