The smartphone is not only the remote control for many people’s connected lives; it’s also a primary gateway to purchasing smart home gadgets and other connected devices. Trends in the wireless market can be a precursor to what happens in the broader consumer electronics world. With that in mind, here are five current mobile megatrends with potential implications for the retail industry.
1. Consumers continue to hold on to their mobile devices.
Consumers are holding on to their mobile phones for nearly 3.5 years, according to Assurant’s most recent Mobile Trade-in and Upgrade Trends Report, compared to two years in 2016. That’s not surprising given that the average price of a smartphone has increased 38 percent in that time, exceeding $1,000 for some models, while technical advances have become more muted. For connected home products, affordability and new features will be key to replacement purchases.
2. Demand for same-unit device repair is increasing.
As consumers keep their mobile devices longer, the likelihood of a mechanical breakdown or other problem increases. In the past, a consumer would most often receive a new or refurbished phone from their carrier to replace the broken one. Today, many consumers want to keep their original device and go as little time as possible without it when getting it repaired.
This demand has led to the rise of same-unit repair services where consumers can get their device fixed locally the same day by going to a repair store or having a technician come to them. Non-carrier retail repair revenues have grown by more than 56 percent since 2017. For the CE industry, that means consumers are becoming used to taking devices to places that often provide repairs on other consumer electronics like laptops, video game systems and smart home equipment. Partnership with these repair locations can provide a more seamless customer experience when something goes wrong with a connected product.
3. Used device residual value is substantial.
When consumers are finally ready to purchase a new smartphone, they are finding great appeal in trade-in programs, which provide an easy, more affordable way to upgrade. These programs are popular with wireless providers as well because trade-in has proven to be an effective way to increase device sales and attract new customers.
Of the estimated 130 million people in North America who will buy a new device in 2022, more than 25 percent will trade in their old device, resulting in $7 billion in value through trade-in programs. While significant, there is still massive untapped value to capture through trade-in. As trade in becomes more broadly utilized, it’s not far-fetched to see consumers taking the same route with connected devices in the home.
4. Pre-owned device sales are outpacing new device sales.
While sales of new smartphones have experienced only modest growth at best in recent years, the sale of refurbished units into North America has seen greater expansion, outpacing new device sales growth since 2017. That trend is expected to continue. While refurbished units made up only 13 percent of total device shipments in 2017, they are predicted to grow to a third of all shipments by 2025.
As consumers become more comfortable buying pre-owned smartphones, they likely will be open to refurbished smart home products as well. Educating customers on the tested and proven quality of used devices — which, properly refurbished, are nearly indistinguishable from new ones — will be a key to driving sales growth in this area.
5. Consumers now expect omni-channel solutions.
The pandemic has accelerated consumers’ adoption of buying just about anything anywhere. While customers have come to expect free shipping on their online purchases, they also want to purchase online and pick up at the store the same day.
In response, companies need to continue transitioning their distribution channels from multi-channel to omni-channel, providing interoperability as well as options. This also goes beyond sales to include trade-in or repair transactions. Consumers want that same flexibility to start the process online and complete it locally at a retail location.
Jeff is the President, U.S. Connected Living, at Assurant, a global provider of risk management products and services with headquarters in New York City. Its businesses provide a diverse set of specialty niche-market insurance products in the property, casualty, extended service protection and pre-need insurance sectors.