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Digital Transformation in Economies and Consumers
Digital Transformation in Economies and Consumers
Digital Transformation in Economies and Consumers
Consumers
May 2021
© Euromonitor International
© Euromonitor International 2021. All rights reserved.
© Euromonitor International
Introduction
Examining Digital Transformation
Meeting Consumer Needs
Conclusion
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Introduction
© Euromonitor International
INTRODUCTION 55
Scope
Digital transformation has been identified by industry leaders and through our global analyst
network as one of the most important themes for our clients, particularly in manufacturing, Disclaimer
education industries and cities. Much of the information in this briefing is of a
statistical nature and, while every attempt has
Investments into digital technologies and industry 4.0 are transforming economies and been made to ensure accuracy and reliability,
consumer behaviour. The briefing examines how digitalisation manifests in manufacturing, Euromonitor International cannot be held
mobility, education and consumer lifestyles to improve business efficiencies, laying the responsible for omissions or errors.
Figures in tables and analysis are calculated
foundations for a digital economy. from unrounded data and may not sum. Analysis
found in the briefings may not totally reflect the
companies’ opinions, reader discretion is advised.
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INTRODUCTION 66
Key findings
236 million new households are forecast to gain access to the internet by 2025. The
Growing number of connected spread of COVID-19 and social distancing have made the usage of digital devices a
households vital everyday necessity and this is set to support connectivity growth.
47% of companies plan to reshape digital strategies while 25% plan to accelerate
Production automation and investments into production automation tools. New technologies are forecast to
digitalisation to accelerate help fortify supply chains and improve operational efficiency.
Around a third of young adults and middle youth are planning to spend more on
Digital learning to help improve technology and education. In turn, education institutions increasingly integrate
education system technologies such as artificial intelligence (AI) and big data to improve learning
outcomes.
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INTRODUCTION 77
Changing consumer preferences and supply chain risks to transform economic landscape
Global Number of Households with Internet Access, A growing need to make supply chains more resilient to future
2020-2025 shocks and pressure to improve operational efficiency are driving
Households with internet access
40,000,000
30,000,000
B2B e-commerce is forecast to play a greater role after the COVID-
19 pandemic as companies respond to consumer preference
20,000,000
changes and aim to better diversify risks. Expansion into e-
10,000,000 commerce platforms is forecast to help reach new consumers and
0 diversify sales risks.
2020 2021 2022 2023 2024 2025
USD million
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Examining Digital Transformation
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 99
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 11
11
the trend is set to be less expressed over 2020-2025. Source: Euromonitor International Voice of the Industry COVID-19 Survey October 2020
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 13
13
Production automation
Investments into production automation technologies are forecast Invest in Automation and New Supply Chain
to accelerate over 2020-2025. According to the Euromonitor Technologies to Prevent Similar Risks in the Future,
International Voice of the Industry COVID-19 Survey, conducted in by Manufacturing Industry, 2020
October 2020, 25% of manufacturing companies plan to increase
investments in automation tools.
Consumer electronics and appliances
Production automation is forecast to be led by industries having
wide product portfolios and long supply chains. Industries such as
Apparel and personal accessories
consumer appliances, apparel and accessories, and automotive are
forecast to be among the leaders in production automation.
Automotive
Growing B2B demand for production automation tools is forecast to
benefit automated industrial equipment suppliers. Global
production value of automated industrial equipment is forecast to Food and beverages
expand by 28% over 2020-2025 to reach USD90.3 billion in the
latter year.
Beauty and personal care
Investments into industrial robots and other production automation
tools would help to transform production into smaller semi-
Household essentials
independent manufacturing hubs, diversify supply chain risks and be
closer to the end-consumers.
0% 10% 20% 30% 40%
Share of total respondents
Source: Euromonitor International Voice of the Industry COVID-19 Survey, October 2020
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 14
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B2B e-commerce
E-commerce is expected to play a greater role in the B2B sector B2B E-commerce Sales in Selected Industries,
sales mix after the COVID-19 pandemic. In order to diversify 2020-2025
operating risks, companies are eyeing investment in e-commerce
Retail and Wholesale
platforms. According to Euromonitor’s Voice of the Industry October
Transport Equipment
2020 findings, 64% of companies plan to invest in e-commerce to
Information and Communications
prevent risks in the future.
Business Services
The global B2B e-commerce market is forecast to expand by 66% Food, Beverages and Tobacco
over 2020-2025 and reach USD4.5 trillion in the latter year. Retail Transport and Storage
and wholesale, transport equipment and ICT industries are forecast Utilities and Recycling
to drive B2B e-commerce sales growth. Finance and Insurance
Expansion into e-commerce is anticipated to help the companies to Government Organizations
better diversify sales channels and risks. By expanding into online Construction and Real Estate
sales channel, companies can increase geographic outreach of Energy
consumers and reduce losses in case physical sales are temporarily Metal Products
disrupted. Hi-tech Goods
Smart cities
Smart cities refers to the use of information communication Top 10 Cities in 2040 with Internet Users and Absolute
technologies in delivering improved and effective use of city assets Growth, 2020-2040
by citizens. Increasing urbanisation and sustainability challenges are 40 25
pushing ahead the need for smart cities. By 2040, 64% of the
35
world’s population is expected to live in urban areas, meanwhile,
Digital learning
The COVID-19 pandemic has resulted in an unprecedented push to Plans to Increase Spending on Education and
online learning. The widespread school closures forced millions of New Technology by Age Group in 2021
students and educators to rely on education technologies (edtech),
including digital learning management systems and Massive Open
Online Course (MOOC) platforms. As a result, edtech companies 15-29
gained traction among investors and witnessed exponential growth
over the year. For example, in 2020 US edtech start-ups secured
investments worth around USD2.2 billion compared to USD1.7
30-44
Age group
billion in 2019, according to EdSurge.
Educators around the world are using technology to increase access
to education. In addition, education institutions increasingly
integrate technologies such as artificial intelligence (AI) and big data 45-59
to change the conventional methods of teaching, boost
collaboration among students, create personalised educational
experiences and improve learning outcomes.
60+
According to Euromonitor International’s Consumer Lifestyles
Survey, around a third of young adults (aged 18-29) and middle
youth (aged 30-44) are planning on spending more on technology 0% 10% 20% 30% 40%
and education over 2021. Consequently, the edtech market is Share of respondents
anticipated to witness strong expansion in the coming years. Education New Technology
Source: Euromonitor International Consumer Lifestyles Survey, 2021
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 17
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Connected households
In 2020, around 61% of global households had access to the internet, World Households with Digital Devices and
around 54% of them had a high-speed connection to the internet. Internet Growth, 2018-2022
During the COVID-19 pandemic, the number of newly-connected 11%
Y-o-y growth
households increased by 2.4%, while new high-speed connections
increased by 3.3%. This means that high-quality connection is 6%
becoming more important than ever before.
1%
2018-2019 2019-2020 2020-2021 2021-2022
The spread of coronavirus and social distancing have made the usage Internet Broadband Internet Personal Computer
of digital devices a vital everyday necessity for many people. During
Smartphone Tablet Laptop
the 2019-2020 period, the number of global households that owned a
PC grew by 2% and reached 52%, while households with tablets grew Households with Internet Access by Income
fastest by 9% and reached 36%. However, due to lower prices and Deciles in Major Economies, 2020
wider functionality, households prefer mobile devices rather than PC. 100
In 2020, around 76% of global households owned a smartphone. 97.1 95.9
% of households
80
87.7 80.8
60 68.9 67.8
40
Unprecedented changes in tech-driven markets also come with 33.7
20
challenges. As internet connection becomes essential for everyday
0
activities, the gap between connected low- and high-income
India Brazil China USA Russia Japan United
households has become all too vivid. Due to high service prices and Kingdom
lack of infrastructure, the digital divide is especially high in emerging Decile 1 Decile 5 Decile 10 Total
and developing countries.
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EXAMINING DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS 18
18
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Meeting Consumer Needs
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MEETING CONSUMER NEEDS 20
20
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MEETING CONSUMER NEEDS 21
21
Our take
Collaborative robots showcase how automated machinery and human
workers can interact and streamline the production process. Use of such
production machinery is also relevant for manufacturing companies in
UR10 collaborative robot in Nissan’s Yokohama factory developed economies which face the issue of an ageing population.
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MEETING CONSUMER NEEDS 23
23
Heinz issued food bundles in 2020 for consumers in the UK. Customers
could order groceries safely through e-commerce platform and have them
delivered straight to home. Following the initial success Heinz launched
vegan bundles in 2021.
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MEETING CONSUMER NEEDS 24
24
Siemens has already delivered the first 23 electric charging stations and
plans to roll out the remaining 97 by the end of 2021. The company also
will provide a cloud-based platform for charging management which will
have the capacity to inform the users the location, availability and
operational status of the charging stations in real time.
Our take
Within the smart city framework, shared and electric vehicles form a
central theme in the future of mobility. As urban populations grow,
making the switch to shared and electric mobility will be vital. But this will
In 2017, Rome’s PM2.5 concentration of particulate matter was 43%
above World Health Organization guideline levels require governments and private bodies to collaborate and invest in the
necessary infrastructure.
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MEETING CONSUMER NEEDS 25
25
Freemium business model helped BYJU’S to become the highest-valued edtech start-up globally
BYJU’S, India’s leading K-12 edtech platform, follows a freemium business model, as some Our take
of the content is available for free, while accessing complete learning modules requires a
The freemium business model is a cost-
paid subscription. The freemium model helps to generate millions of inquiries every
effective method of scaling up a user base. It
month. The company’s customer base expanded from 50 to 75 million students over
can also help to build brand awareness quickly
March-November 2020, attracting huge attention from investors. BYJU’S secured USD1.2
for newly-launched companies. Thus,
billion investments from top-tier global investors in 2020. After raising USD460 million as
companies adopting a freemium business
a part of Series F funding round, BYJU’S valuation reached USD13 billion in March 2021.
model, such as BYJU’S, will continue to
As a result, the Bangalore-based edtech giant has become the second highest-valued
promote online learning and the adoption of
Indian start-up and the highest-valued edtech start-up in the world.
digital tools in the education industry.
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MEETING CONSUMER NEEDS 26
26
aSmartWorld initiative helps to improve digital connectivity and reduce electronic waste at the same time
Lockdown and social distancing highlighted the digital exclusion issue as never before. To Our take
solve this issue, the aSmartWorld start-up launched an initiative where unused devices
Addressing digital exclusion will become more
are given away to people who need them the most.
important as economic and business
This initiative has a positive impact on the environment since smart devices are digitalisation accelerates. Companies
refurbished and have a second life. At the same time devices are freely redistributed to supporting local communities could help to
people disadvantaged by the digital gap. Following this initiative, more companies solve social issues and in turn expand the base
decided to collaborate by giving away their smart devices. of loyal customers.
This example shows that social actions can contribute to solving more that one relevant
issue.
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Conclusion
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CONCLUSION 28
28
+236 mn
INCREASE IN HOUSEHOLDS WITH INTERNET
ACCESS OVER 2020-2025
+47%
GLOBAL B2B E-COMMERCE MARKET GROWTH
OVER 2020-2025
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CONCLUSION 29
29
Challenges to overcome
Uncertainty: Companies investing in digital tools face high uncertainty when measuring
return on investment
Long project cycles: Implementation of automation projects takes time and requires
changes in management culture
Skills shortage: Digitalisation of economies will increase the shortage of skilled workers
and will require a new approach to training programmes
Societal issues: Digitalisation of economies can have negative effects on the daily lives of
societies, thus companies must prepare for potential challenges
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CONCLUSION 31
31
Geopolitical, climate and healthcare risks are forecast to remain high and could
potentially disrupt manufacturing activities. Diversification of supply chains and
Fortification of supply chains
investments in digital tools to better manage the production process will be crucial when
anticipating and preparing for future disruptions.
Improving household access to the internet and changing lifestyles will require changes in
sales strategies and implementation of an omnichannel sales approach. By investing in e-
Diversification of sales channels
commerce platforms, the companies can better meet consumer needs, increase
geographic scope of operations and diversify sales channel risks.
Investments in digital and production automation tools require financial, time and
managerial resources, although final return on investment is difficult to measure. By
Using step-by-step approach
implementing smaller-scale projects, companies can reduce the uncertainty, test new
tools with minimal risks and later implement successful ideas on a broader scale.
Digital tools can help to improve internal communication and information exchange
within a company and its clients. Improved internal communications enable better
Improving internal communications
collaboration between employees and faster information flows which is crucial during
times of emergencies.
© Euromonitor International
DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS
Gaile Mikalauskaite
Senior Analyst, Industrial
gaile.mikalauskaite@euromonitor.com
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DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS
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DIGITAL TRANSFORMATION IN ECONOMIES AND CONSUMERS
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