COVID-19’s Influence over CE Buying Habits
Since we spent considerable time yesterday parsing data on SVOD and Social Media, we spend a bit more time on data that gives some insight into how COVID-19 has changed buying habits, in this case in Australia, a country where CE products (excluding appliances) represent ~3.3% of the total yearly value of all imports (more than passenger vehicles or crude oil imports) into the country. During the COVID-19 pandemic Australia saw relatively few COVID-19 cases (on a per/million basis) until 4Q 2021 when the Delta variant became dominant, however as early as March of 2020 the country’s borders were closed to all non-residents and Australians returning to the country were placed in quarantine for two weeks., along with states and territories limiting such borders at various times during small outbreaks. Outbreaks in major cities like Victoria and Melbourne saw lockdowns that lasted 3 to 4 months and a vaccination program began in February of last year. A Delta variant outbreak caused almost half of the country to return to lockdown in July 2021, although the government ended most public restrictions when a 90% vaccination rate was reached in December ’21, despite the Omicron variant causing new cases to spike.
From an economics standpoint the Australian government was proactive and cut interest rates in early 2020, followed by a $17b stimulus plan that included both individual and small business payments and support, along with wage subsidies for trainees, and a second package that was paid out in September 2020, but by that time the Australian economy had fallen into recession. Travel between Australia and New Zealand was restored and curtailed at various times in 2020 and 2021. By April of last year restrictions were being lifted for some cities but in November the Omicron variant appeared and case rate began to increase spiking fears that another outbreak would occur, forcing purchase restrictions as a wave of panic food and supply buying was the result. All in, while Australia saw a relatively mild run with COVID-19 due to swift government action, the economic effects were similar to those in other countries, especially those that depended on tourism and migrant workers for agriculture.
So whar does this all have to do with consumer electronics? Despite the economic impact of COVID-19, Australian citizens bought consumer electronics during the lockdowns and restrictions, with 28% of Australians purchasing a new ‘device’ in 2020 and 38% in 2021. Smart TV penetration rose from 58% in 2020 to 64% in 2021 and 33% of households upgraded their internet connection, with the need for additional speed as the primary reason, although 67% stayed with their existing carrier, and the data for Gen Z is parsed, 31% in that age category increased their internet speed for gaming, 38% for YouTube streaming, and 27% for SVOD services, although 9% said they changed to another plan (likely slower) in order to lower the cost.
As to specific items purchased as a result of COVID-19, the percentage of Australians buying each device type increased in 2021 over 2020, with a weighted average increase of 5.8%, and as has been the case through most of the pandemic, laptops saw the most turnover, likely due to remote learning needs and work-at-home requirements. While video calling devices, such as PC cameras and accessories grew 100% y/y, we were surprised that so few Australian bought such devices, unless the market was already saturated, and equally surprised that smartphones were the 2nd most popular CE purchase given the weakness in that category in other regions.
While the current COVID-19 new case data for Australia (see Figure 2) is certainly not conducive to stimulating CE sales in 2022, the high vaccination rate in Australia (over 86%) has led to a lower ‘serious’ infection rate and relaxed mandates, after a spike in January. If Australia continues to push for full vaccination and boosters, barring any unforeseen circumstances, the economy should grow between 3.5% and 4.0% this year, with a return to a more normal country-wide supply chain. Inflation, which was already an issue for Australia coming into 2022 has increased as the war in Ukraine has increased the price of gasoline by about 30% this year, which could impinge on that growth forecast, but it will be interesting to see if Australian consumers remain net buyers of CE products overall as the economy returns to some sort of normal, and which products will see growth or declines. We would expect laptops to see little growth, while we would expect television sets to see higher growth than last year, with smartphones sales value less this year than last, despite the 5G penetration increase we expect this year (grew from 6% in 2020 to 14% in 2021) as 5G capabilities drift down to lower priced phones.
While Australia has a number of metrics that make it different from other high CE import countries, we expect that it is a good example of a country that was and has been aggressive toward COVID-19 and its impact on the economy, with CE purchase data reflecting that positive stance. While the global economy will be an influence, we see Australia as a model for understanding consumer CE buying patterns in 2022 and pitted against countries that have taken a more ‘relaxed’ attitude toward COVID-19, it should help to give a balanced picture as to how consumers will react to a less COVID-19 burdened life.
From an economics standpoint the Australian government was proactive and cut interest rates in early 2020, followed by a $17b stimulus plan that included both individual and small business payments and support, along with wage subsidies for trainees, and a second package that was paid out in September 2020, but by that time the Australian economy had fallen into recession. Travel between Australia and New Zealand was restored and curtailed at various times in 2020 and 2021. By April of last year restrictions were being lifted for some cities but in November the Omicron variant appeared and case rate began to increase spiking fears that another outbreak would occur, forcing purchase restrictions as a wave of panic food and supply buying was the result. All in, while Australia saw a relatively mild run with COVID-19 due to swift government action, the economic effects were similar to those in other countries, especially those that depended on tourism and migrant workers for agriculture.
So whar does this all have to do with consumer electronics? Despite the economic impact of COVID-19, Australian citizens bought consumer electronics during the lockdowns and restrictions, with 28% of Australians purchasing a new ‘device’ in 2020 and 38% in 2021. Smart TV penetration rose from 58% in 2020 to 64% in 2021 and 33% of households upgraded their internet connection, with the need for additional speed as the primary reason, although 67% stayed with their existing carrier, and the data for Gen Z is parsed, 31% in that age category increased their internet speed for gaming, 38% for YouTube streaming, and 27% for SVOD services, although 9% said they changed to another plan (likely slower) in order to lower the cost.
As to specific items purchased as a result of COVID-19, the percentage of Australians buying each device type increased in 2021 over 2020, with a weighted average increase of 5.8%, and as has been the case through most of the pandemic, laptops saw the most turnover, likely due to remote learning needs and work-at-home requirements. While video calling devices, such as PC cameras and accessories grew 100% y/y, we were surprised that so few Australian bought such devices, unless the market was already saturated, and equally surprised that smartphones were the 2nd most popular CE purchase given the weakness in that category in other regions.
While the current COVID-19 new case data for Australia (see Figure 2) is certainly not conducive to stimulating CE sales in 2022, the high vaccination rate in Australia (over 86%) has led to a lower ‘serious’ infection rate and relaxed mandates, after a spike in January. If Australia continues to push for full vaccination and boosters, barring any unforeseen circumstances, the economy should grow between 3.5% and 4.0% this year, with a return to a more normal country-wide supply chain. Inflation, which was already an issue for Australia coming into 2022 has increased as the war in Ukraine has increased the price of gasoline by about 30% this year, which could impinge on that growth forecast, but it will be interesting to see if Australian consumers remain net buyers of CE products overall as the economy returns to some sort of normal, and which products will see growth or declines. We would expect laptops to see little growth, while we would expect television sets to see higher growth than last year, with smartphones sales value less this year than last, despite the 5G penetration increase we expect this year (grew from 6% in 2020 to 14% in 2021) as 5G capabilities drift down to lower priced phones.
While Australia has a number of metrics that make it different from other high CE import countries, we expect that it is a good example of a country that was and has been aggressive toward COVID-19 and its impact on the economy, with CE purchase data reflecting that positive stance. While the global economy will be an influence, we see Australia as a model for understanding consumer CE buying patterns in 2022 and pitted against countries that have taken a more ‘relaxed’ attitude toward COVID-19, it should help to give a balanced picture as to how consumers will react to a less COVID-19 burdened life.
New Device Purchases Due to COVID-19 - Australia - Source: SCMR LLC, Deloitte
COVID-19 - New Cases/Million - Australia - Source: Ourworldindata.com
COVID-19 - Total Cases/Million - Australia - Source: Ourworldindata.com
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