The Impact of COVID-19 on Technology in the UK
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Description
“The boom in use of videoconferencing services has been the highest profile example of consumers turning to tech to fulfil a lockdown-driven need, and the sector is likely to see continuing competition between the major services even after lockdown is lifted. Although people will no longer be as reliant on it by necessity, it’s likely that it will retain a significant role in many people’s lives.”
– Matt King, Category Director – Technology and Media Research (26 June 2020)
This report will look at the following areas:
- The impact of COVID-19 on consumers.
- How COVID-19 has already affected consumer technology markets.
- The shift in consumer behaviours in consumer technology in the short, medium and long term.
- Lessons from the last economic recession.
- Lessons from other markets outside the UK.
Table of Contents
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Overview
- Key issues covered in this Report
- Products covered in this Report
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Executive Summary
- Short, medium and long-term impact on the industry
- Figure 1: Expected impact of COVID-19 on consumer technology markets – short, medium and long-term, 26 June 2020
- How COVID-19 Has Already Affected Technology Markets
- Contrasting fortunes across key tech categories
- Figure 2: Technology market size and forecast (adjusted for COVID-19 on 24 June 2020), 2014-24
- The Impact of COVID-19 on consumer sentiment
- Which Behaviours Will Change in the Short-term?
- Which Behaviours Will Change in the Medium-term?
- Which Behaviours Will Change in the Long-term?
- What Can We Learn from Previous Slowdowns?
- Lessons from Other Markets
- COVID-19: UK context
- Short, medium and long-term impact on the industry
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The Impact of COVID-19 on Consumers
- Anxiety levels align with case curve…
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- Figure 3: Mintel COVID-19 exposure anxiety index, 28 February – 3 June 2020
- … but consumers remain anxious about their health
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- Figure 4: People’s level of concerns about the risk of being exposed to the coronavirus, 28 February – 3 June 2020
- COVID-19 concerns by demographics
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- Figure 5: Proportion of consumers showing the highest degree of concern (4 or 5 out of 5) regarding the risk of being exposed to the coronavirus, by age, 28 February – 3 June 2020
- UK begins to soften lockdown measures
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- Figure 6: Government COVID-19 lockdown exit strategy, published 11 May 2020
- Lockdown fears moderate
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- Figure 7: People’s level of concerns about how the outbreak might affect their lifestyle, 28 February – 3 June
- A bleak outlook for the economy
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- Figure 8: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 28 May – 3 June 2020
- Consumers cut back outgoings, and add to savings
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- Figure 9: How consumers have been affected or changed their behaviour as a result of the outbreak, 21-28 May 2020
- Household finances hold steady for most
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- Figure 10: changes in financial situation since the start of the COVID-19 outbreak, 21-28 May 2020
- COVID-19 is yet to meaningfully affect most households’ well-being…
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- Figure 11: The financial well-being index, January 2015-May 2020
- …but confidence for the year ahead plummets
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- Figure 12: Consumers’ financial confidence for the coming year, May 2020
- Middle age groups feel particularly vulnerable…
- …and self-employed respondents show the importance of the COVID-19 support package
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How COVID-19 Has Already Affected Technology Markets
- Technology purchasing and purchase intentions have been suppressed by the crisis
- Figure 13: Technology and communications spending intentions for the next month compared to usual, 21 March-18 June
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- Figure 14: Electrical equipment bought in the last three months and next three months, Jan-May 2018-20
- Supply chain shortages have had an immediate impact
- Apple revises revenue guidance
- Samsung warns of drop in Q2 mobile earnings
- TV panel shortages reported; Nintendo Switch production and shipments delayed
- Facebook says hardware production has been hit
- Major trade show cancellations have limited opportunities for exposure
- Internet traffic has surged
- Shift to homeworking and home schooling drove computer sales in April
- People have turned to video calling in droves
- Figure 15: Changes in leisure habits as a result of COVID-19 outbreak, 26 Mar-16 Apr
- Zoom usage boomed in March…
- …but its path to success has raised security concerns
- Digital entertainment is in demand
- Gamers’ online activity putting strain on servers
- Key players offering freebies to help during periods of isolation
- Esports stepping into the void left by traditional sport cancellations
- Time and money spent in apps has grown as people shift their focus online
- Strong growth in previously niche categories
- Big tech has offered its services…
- …but the UK government initially went its own way with track and trace
- Privacy issues abound regardless of which platform is used
- Technology purchasing and purchase intentions have been suppressed by the crisis
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Category Forecasts
- Spend on digital goods to get COVID-19 boost
- Hardware category will suffer as people defer big-ticket purchases
- Long contracts will cushion the impact for service providers but SIM-only shift will accelerate
- Figure 16: Technology market size and forecast, 2014-24
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- Figure 17: Technology market size and forecast, 2014-24
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Which Behaviours Will Change in the Short-term?
- 2020 to be a tough year on all fronts…
- …but some categories could benefit
- People may add to their home offices
- Focus on home improvement could boost interest in smart home devices
- Facebook Portal is tailor-made for lockdown
- Figure 18: Portal ad on Facebook mobile
- Figure 19: Facebook Portal TV
- Videoconferencing competition to continue in the consumer market
- Tech can use this time to establish healthcare credentials
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Which Behaviours Will Change in the Medium-term?
- Spending in 2020 will remain subdued even post-lockdown
- Caution will remain in 2021 but some pent-up demand will be released
- The delayed 5G boost will kick in next year
- Growing focus on health could benefit wearable technology
- Figure 20: Whether have placed greater importance on eating healthily or doing exercise since COVID-19 outbreak, by generation,16-23 Apr 2020
- Bringing healthcare and fitness together will resonate more than ever
- Figure 21: Withings marketing email, April 11 2020
- Esports viewers gained during lockdown will boost medium-term revenue growth
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Which Behaviours Will Change in the Long-term?
- People will show greater appreciation for tech as a tool to connect
- Manufacturers and marketeers will need to adjust their focus accordingly
- Move to homeworking will reduce purchasing of separate work and leisure devices
- Boundaries between the consumer and enterprise markets will blur
- Lockdown will have laid the groundwork for new, social realities
- Figure 22: Oculus Rooms, 2016
- Greater local focus will give new direction to digital services
- Figure 23: Nextdoor app
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- Figure 24: Facebook Shops
- Maps can turn local focus into direct revenue opportunities
- Figure 25: Activities done through mapping apps/websites, January 2020
- Attitudes to tech’s role in healthcare will have changed…
- …creating business opportunities build around our health data
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What Can We Learn from Previous Slowdowns?
- Technology cycles can counteract economic influences
- Mobile phones market shrank in 2009 but bounced back quickly
- Figure 26: Value of mobile phone sales, 2008-13
- Laptop sales dip was delayed by people trading up from desktops
- Figure 27: Value sales of desktop and laptop computers 2006-11
- Digital switchover saw TV sales grow in 2008-09 despite the recession
- Figure 28: Value and volume sales of televisions, 2007-12
- What will be different in the post-COVID recession?
- Supply chain shortages and store closures will hit tech markets hard
- High unemployment will mean more dropping out rather than trading down
- Technology cycles will again help mitigate the impact of economic factors
- Emerging technologies will continue to improve and attract new market entrants
- Figure 29: Household ownership of voice-controlled speakers, December 2017-April 2020
- Wearable tech should grow, despite the recession
- Figure 30: Personal ownership of smartwatches and fitness bands/sports watches, October 2017-April 2020
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Lessons from Other Markets
- Looking to China as it emerges from lockdown
- March saw a rapid bounce back in sales in some tech sectors…
- …driven by the shift to homeworking and enthusiasm for smartphones
- Figure 31: China – Nominal growth by retail sales of consumer goods, January-April 2020
- High-end tech products not in the firing line as much as other luxury categories
- Figure 32: China: changes in desire for luxuries after COVID-19, 26 Apr-2 May 2020
About the report
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
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Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.
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Data
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*databooks not available with UK B2B Industry reports.
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