Are US Consumers ready to jump back on the smartphone purchase bandwagon? Yes and No!
A typical consultant answer and it depends of course on which operator they have, which device brand they prefer and a host of other factors:)
This blog focuses on consumer confidence and planned purchases and asks: are US consumers mentally, emotionally ready to leap right back on the smartphone and 5G purchasing train?
Strategy Analytics Consumer Insights team has analysed customer attitudes, awareness and behavior changes due to COVID-19. We analysed the purchase intentions of 1,444 smartphone owners in USA March 21-23rd to assess how the virus has impacted their plans for purchase of a new smartphone and to upgrade to 5G service as well as their views on when life may return to normal.
One in five US consumers have postponed or cancelled plans to buy a new smartphone while planned 5G adoption has also suffered due to the anxiety and disruption.
Q2 will likely be much worse than Q1 as consumers face the reality of a surging death toll, huge unemployment and a likely deep and potential extended recession. A portion of US consumers are not ready to rejoin the smartphone and 5G roundabout as yet and will need motivation to open their wallets.
Overall, US smartphone users are optimistic with one third expecting recovery in the next 3 months and 70% expecting recovery within 6 months. Nevertheless, there is hesitation among roughly one in five about committing to a new smartphone or adopting 5G.
Even before covid-19, US replacement cycles had surged from the halcyon days of 24 months a few years ago to well over 36 months today. There are of course variations across flagship vs mid tier and entry tier devices. The devastating personal impact of those infected and seeing friends, family, colleagues die (over 20k as of this writing) have relegated discretionary expenditures to insignificance over the last month or so. Looking ahead the recession we expect in US and globally allied to already fever pitched anxiety will only make matters worse.
A number of key questions need further probing to help operators and device vendors to understand how to convince consumers to open their wallets again:
- Will subsidies be a useful tool to spur consumer spending? For which segments of the market?
- In early 5G markets like China we have vendor “gifts” such as TWS headphones, TVs, tablets, air conditioners,and even chicken dinners. Which mix of gifts, vendor, operator financing and promotions will appeal to hesitant buyers as the US ramps up 5G?
- What value added offers in terms of accessories, insurances, trade ins will be needed to convince those most nervous about the future outlook to overcome inertia and take the first step of shopping for new device and services?
Operators, vendors and retailers will have to work extra hard to persuade a hesitant portion of smartphone owners that new devices and new 5G services are worth making an investment in relative to other priorities.
Client can access a copy of the full report here. Strategy Analytics will be going to field with wave 2 of our US, UK and China survey shortly and welcome your thoughts on key questions, topics that need to be addressed. We are delighted to add countries on demand as custom engagements or to consider specific proprietary questions.