Consumers mulling to cut spending on their next smartphone purchase by 20%, says survey

Consumers are willing to cut down on spending while purchasing their next smartphone according to the latest Consumer Lens study by Counterpoint Research.

One in three respondents of the global survey has shown willingness to cut their spending while purchasing their next smartphone by 20 per cent on an average as per the report.

The decreased spending comes in light of Covid-19. Supply chain disruptions amid lockdowns and the negative impact on the economy will have a negative impact on smartphone sales as per previous reports.

“The economic activities of all major countries have been severely impacted by the COVID-19 crisis. With coronavirus cases surpassing 8 million globally in June 2020 and the new confirmed cases continuing to rise, all major markets saw a significant reduction in consumer spending. This will likely lead to negative smartphone sales growth globally in 2020,” said the Counterpoint study.

The survey was conducted across seven major smartphone markets - USA, UK, India, France, Germany, Spain, Italy.

Consumers in India are leaning towards budget smartphone for their next purchase. As per the report, half the respondents surveyed were willing to spend between $135 - $250 (₹10,000 - ₹20,000) on their smartphone.

Despite the low spending, consumers were willing to make additional smartphone purchases owing to the increasing need for new devices in a post-pandemic shift.

“About seven in ten respondents are interested in buying a separate smartphone for kids to help with their learning,” the report said.

On the other hand, many respondents also expressed their willingness to postpone the purchase due to multiple reasons.

According to the report, almost half the consumers were willing to postpone their next smartphone purchase. The number was highest amid Indian respondents with 61 per cent of respondents stating that they will wait before planning to buy a new phone.

“More than half of the respondents intend to replace their devices in the next year. As a big proportion of users will wait for a longer period to replace their smartphone, it will push the average replacement cycle from the current 22 months to around 26 months,” the report said.

As for Spain and Italy, 58 per cent and 56 per cent consumers respectively were willing to wait longer for replacing their phones. In the UK, the number was 56 per cent while in the USA, the number intending to delay buying was 41 per cent. Germany had the fewest respondents planning to delay purchasing at 34 per cent.

“The coronavirus outbreak and future income uncertainty has affected consumer behaviour with many strictly limiting purchasing to only the essentials,” Senior Analyst, Pavel Naiya, said.

Buying trends

Apart from the delay in the purchase, the crisis has also impacted buying trends of consumers with many looking towards a “low touch” sales channel for purchasing their devices.

“To maintain social distancing, two-thirds of the respondents in India and more than half the respondents in Italy and the USA are looking for a ‘low touch’ sales channels. This will likely lead to more online ordering with home delivery and online ordering but collecting in-store – also known as online-to-offline (O2O), or click-and-collect,” the report said.

“We have seen many initiatives taking place in developing countries like India in the early phase of the lockdown period,“ Research Associate, Arushi Chawla said citing examples of new sales initiatives from brands such as Samsung, Xiaomi, Vivo and Oppo.

The report also emphasized on awareness campaigns attract consumers.

“All O2O operations come with an overhead cost and additional expenses involved in the awareness-building campaign. It is hard on the bottom-line especially when most of these smartphone manufacturers are already operating on thin margins. Nonetheless, the coronavirus is here to stay, and top brands will look forward to creating long term strategic investments in making their distribution more agile,” Chawla added.

Indian consumers are highly reliant on online review articles followed by friends and family and technology-related YouTubers in order to make a decision about the devices to be purchased as per the reports.

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