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Can tech companies reach older consumers during the pandemic?

by Jeff Loucks, Girija Krishnamurthy
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    3 minute read 24 June 2020

    Can tech companies reach older consumers during the pandemic? Boomers and Matures can afford to spend on consumer technology, but they aren’t buying

    3 minute read 24 June 2020
    • Jeff Loucks United States
    • Girija Krishnamurthy United States
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    To recover from the COVID-19 shock, tech companies need to appeal to older consumers—those who have money to spend but choose not to spend it on tech.

    Lack of motivation, not money, keeps older consumers from buying new tech

    For companies that sell consumer electronics devices—from laptops and smartphones to smart TVs and wearable tech1—the COVID-19 pandemic has created both supply and demand shocks.2 Lockdowns have cut corporate revenue and led to record US unemployment, both of which could worsen as the pandemic continues.3 To recover and survive, companies need consumers to look beyond continued economic uncertainty and buy new devices.

    This means that tech companies need to reach outside their comfort zone and convince consumers 55 and older—which Deloitte classifies as Boomers and Matures4—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 (see figure), according to the biweekly Deloitte State of the Consumer Tracker survey.5

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    Only 11 percent of Boomers and Matures say they worry about making upcoming payments, compared to 41% of Gen Z and Millennials, and 35% of Gen X consumers. And at a time of enormous economic uncertainty, only 31 percent 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.6 Deloitte asked US consumers whether they plan to spend more on electronics over the next four weeks compared to 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 36 percent 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,7 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 wealth8 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 they need to make.

    Acknowledgments

    Cover image by: Viktor Koen

    Endnotes
      1. According to IDC, worldwide sales of consumer electronic devices such as smartphones and laptops fell sharply in the first quarter of 2020. Due to supply chain shocks, PC makers were unable to capitalize on demand for laptops as employees migrated to home offices. See: IDC, “Worldwide smartphone market suffers its largest year-over-year decline in Q1 2020 due to COVID-19,” April 30, 2019; IDC, “Traditional PC shipments saw a sharp decline in Q1 2020 despite increased demand to meet remote work and school needs,” April 13, 2020. View in article

      2. Jeff Loucks et al., COVID-19 outlook for the US technology industry, Deloitte, May 11, 2020. View in article

      3. Daniel Bachman and Val Srinivas, United States Economic Forecast: Update, May 2020, Deloitte Insights, May 28, 2020. View in article

      4. The Deloitte State of the Consumer Tracker does not mention generations specifically, but its three age categories correspond to generational groups Deloitte uses in its Digital Media Trends and Connectivity and Mobile Trends surveys: 18–34 = combination of Gen Y and Millennials; 35–54 = Gen X; 55 and older = combination of Boomers and Matures. For a detailed discussion of Deloitte’s breakdown of generations by age, see Deloitte, Connectivity and Mobile Trends Survey: Build it and they will embrace it, December 2019. View in article

      5. Deloitte, Deloitte State of the Consumer Tracker. While this is a global survey, in this paper, we discuss only US consumers. View in article

      6. Deloitte’s Deloitte State of the Consumer Tracker shows that while consumers 55 and older are trimming discretionary spending across the board, travel and electronics top the list of categories they’re reducing. And as noted above, 69 percent say they’re not putting off big purchases, meaning they will spend big on high-priority items. View in article

      7. Deloitte, Connectivity and Mobile Trends Survey. View in article

      8. Christopher Ingraham, “The staggering millennial wealth deficit, in one chart,” Washington Post, December 3, 2019. View in article

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    Jeff Loucks

    Jeff Loucks

    Executive Director | Center for TMT

    Jeff Loucks is the executive director of Deloitte's Center for Technology, Media, & Telecommunications, Deloitte Services LP. In his role, he conducts research and writes on topics that help companies capitalize on technological change. An award-winning thought leader in digital business model transformation, Jeff is especially interested in the strategies organizations use to adapt to accelerating change. Jeff’s academic background complements his technology expertise. Jeff has a Bachelor of Arts in political science from The Ohio State University, and a Master of Arts and PhD in political science from the University of Toronto.

    • jloucks@deloitte.com
    • +1 614 477 0407
    Girija Krishnamurthy

    Girija Krishnamurthy

    Principal | Deloitte Consulting LLP

    Girija is a principal at Deloitte Consulting, and serves as the Global Lead Consulting partner for HP. She is also the National Hardware and Consumer tech industry leader at Deloitte Consulting. She has more than 20 years of consulting experience in leading a portfolio of clients in the tech industry and in large-scale, global business transformations, and technology implementations. Throughout her career with Deloitte, Girija has held a variety of leadership roles. She led finance digital transformation for one of our largest technology practices. In the marketplace, she has led a number of client transformation programs including, helping several Fortune 100 companies redefine and evolve their business models, and execute digital transformations to achieve tangible results. What she enjoys most is delivering value for our clients by making the complex simple, and ideas executable.

    • gkrishnamurthy@deloitte.com
    • +1 949 735 9918

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