Megatrends: Quantifying Digital Living
By Michelle Evans
With the pandemic disrupting all aspects of consumers’ lifestyles, Euromonitor International’s Analytics team created a megatrends quantification model to help assess the impact of these long-term trends. The model will be leveraged in this article to quantify the Digital Living megatrend.
The Digital Living megatrend refers to the multi-year trend of consumers using a variety of internet-connected devices to experience and interact with digital content and access services. With penetration of both devices and infrastructure spreading, this megatrend will further alter the way consumers live, work, shop and play in the years to come.
What are the biggest markets for Digital Living?
The megatrends model provides a comprehensive framework to map the market potential for megatrends, including Digital Living, across 40 countries. In particular, the model helps to identify white space opportunities in these countries, pinpointing where the shifts towards this digital-first lifestyle is gaining traction.
The US, the UK, South Korea, Australia and Sweden are the five largest markets for Digital Living, based on the megatrend’s per capita retail value in 2020. This is not surprising as these markets are among the wealthiest and most digitally developed. These markets also typically rank high in Euromonitor International’s annual Digital Consumer Index, which measures the connectivity of a market and the propensity of its consumers to spend online.
By contrast, the smallest markets for this megatrend in terms of per capita value in 2020 are all emerging markets. In particular, the model points to India, Nigeria, Egypt, the Philippines and Vietnam as being the smallest for this megatrend of the 40 countries studied. While there is significant attention on these consumer markets due to their long-term potential, the digital spend in each of these markets remains just a fraction of what can be seen in the world’s most sophisticated digital markets.
How is the Digital Living megatrend evolving?
Many of the consumer behaviours related to the Digital Living megatrend were accelerated because of the Coronavirus (COVID-19) pandemic. Consumers turned to digital platforms with greater frequency for work, school, play and shopping. While this activity is unlikely to stay at crisis level, as vaccines provide hope of normalcy, this period is likely to usher in a new threshold for what it means to live life digitally.
The model estimates that the Digital Living megatrend enjoyed a 14% CAGR over the period 2015-2020. The only megatrend that grew more was Shopping Reinvented, which posted a 42% CAGR over the same period as consumers shifted to digital channels to browse and buy. By contrast, Experience More, which was hurt by the reduction of in-person experiences during the pandemic, posted a negative CAGR of 5% during the same period.
Looking ahead, Digital Living is expected to post the second strongest CAGR over 2020-2025, once again after only Shopping Reinvented. In many ways, these two megatrends encompass the massive digital shift that is forever altering how consumers live their lives and where they shop for goods and services. During the forecast period 2020-2025, Euromonitor International estimates that e-commerce sales will account for 51% of absolute growth in retail, for example.
Where are the growth opportunities for Digital Living?
Unsurprisingly, Asia Pacific will lead the growth opportunities for Digital Living in the forecast period, with the region expected to post a 13% CAGR. With the large population base of millennials with strong connectivity, consumers in this region are known to be tech-savvy and avid social media users, driving trends such as social commerce and livestreaming. In fact, the region has been a dominant force behind digital developments in industries ranging from payments to retail. As a result, it is often labelled as the world’s innovation hub.
On top of that, the consumer market is expanding rapidly, with this region expected to see its per capita GDP triple by 2040, which will be carried by the rise of emerging markets across the region. The model also points to emerging Asian markets as those that will drive opportunities in Digital Living. In particular, the model forecasts that the greatest opportunity for this megatrend will be in Vietnam, followed by India, Thailand, Indonesia and the Philippines. Highly developed Asian markets, including Hong Kong, South Korea and Japan, are expected to offer the least opportunity for the Digital Living megatrend, not only in the region, but also globally.