Insight

An increasingly connected world

3 June 2021
Ido Cohen
Ido Cohen
Senior Portfolio Manager
Juan Hartsfield
Juan Hartsfield
Portfolio Manager
An increasingly connected world
Invesco Global Consumer Trends Strategy

Connectivity has changed consumer behaviour dramatically over the past few decades: we can now shop or consume media whenever and wherever we want. And in our view, this is only the beginning.

Those who used the internet in its early days are likely to remember the jarring noise emitted by the dial-up modem as their home computer connected – slowly – to the World Wide Web. The latter mostly consisted of simple or (by today’s standards) barely functional websites that took forever to download, whilst the cost of connecting was terribly high.

But as the years passed, the internet became more usable and the cost of access became more reasonable. The number of internet users has risen steadily, with an estimated 1.5 billion new users coming online in the last five years alone1. Whilst internet access was once seen as somewhat of a novelty factor, there are now calls for it to be recognized as a human right.

A couple of years ago, there was an inflection in the rate we were connecting people (and hence consumers) around the globe. Much of this was driven by more affordable smartphones and mobile data plans. The earlier part of the curve represents the rising use of smartphones amongst developed market consumers, who were likely already connected to the internet through computers at home. Smartphones have allowed them to be connected to the internet most of the time, and this enables them to do discretionary things far more frequently.

For example, not long ago there were limited options for people to while away the time during their daily commute on public transport. They could listen to music downloaded onto an MP3 player of their choice or they could read a magazine or book they had bought. But today, the options for those very same commuters reach far and wide: they can do their shopping through their smartphones or decide to buy (and read) a book whilst still sitting on a moving bus.

Figure 1: The inflection in connectivity is changing consumer behaviour
The inflection in connectivity is changing consumer behaviour
Source: ITU, Ericsson, BofA Estimates, Invesco Estimates, as at Feb 2021. Most recent data available. For illustrative purposes only. Estimates are based on current market conditions and are subject to change without notice.

Smartphones are now penetrating the emerging markets. Here, a lot of consumers are being connected to the internet for the first time – and this is very important. Because when you become connected for the first time, it significantly changes your behaviour as a consumer. You suddenly have access to many goods – or many services, types of media and information – that you never had access to before, and this means that the way you consume changes dramatically.

A lot of our work in the Invesco Global Consumer Trends Strategy is focused on trying to understand the big changes in consumer behaviour that follow from increased connectivity. In the following sections, we will seek to highlight various industries that we believe will see significant changes as a result of technology. And despite all appearances, many of these industries are still in the early phase of transitioning from the old analogue world to the increasingly connected one that we are all racing towards.

1 Source: Internet World Stats as at 31 January 2020.

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