Changes in US Consumer Digital Adoption

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Changes in US Consumer Digital Adoption

Key Takeaways


This research provides detailed analyses covering various aspects of U.S. consumer digital adoption. First, it tests the hypothesis of whether businesses have reached their peak in digital growth and whether converting consumers to digital solutions is still a strategic driver for companies at large. The research further provides trends in the next 1-2 years that will have a transformative impact on consumers and businesses and an analysis of how companies in various industries are moving strategically (where they are focusing their efforts). Lastly, the research compares various statistics surrounding the smartphone adoption rates in the U.S. since the onset of the pandemic compared to 2022. However, the most recent and comprehensive report on the U.S. smartphone adoption rates is from 2021 by Pew Research, and most of the data points shared have not changed from a previous report published in 2019.

1. Hypothesis Testing: Has Adoption of Digital Services Reached its Peak?

Have Businesses Reached their Peak Regarding Digital Growth

  • Looking ahead, 67% of the top-performing companies are positioning themselves to leverage technology as a core differentiator, 15% plan to become tech leaders, 8% plan to maintain their current status, and another 8% plan to keep up with industry standards.
  • A report by Statista shows that the projected share of technology adoption by companies in the U.S. by 2022 is highest at 89% in the user and entity big data analytics category, 80% in the internet of things segment, 76% across app and web-enabled markets, 75% in machine learning, and 71% in cloud computing. More categories and their adoption rates are included in the attached Google Document.
  • The image below shows segments where digital transformation activities have increased.
  • In the U.S., digital spending across businesses, products, and solutions increased by 9% in 2021 and could register a 7.2% year-over-year growth by the end of 2022. Additionally, over 67% of U.S. IT experts anticipated rising tech budgets during the 2021/22 period, with 26% predicting a jump of around 5% in tech spending.
  • U.S. spending on marketing technology is anticipated to continue climbing and could surpass $20 billion in 2022. Martech spending by B2B firms will increase by 14.6% in 2022, 12.4% in 2023, and 14.9% in 2024.
  • Data by Corinium Intelligence shows that about 53% of businesses globally acknowledge they have digitized their client-facing business processes, another 48% have migrated data and applications to the cloud, and 42% claim to have finished digitizing their back-office operations.
  • A study by Harvard Business Review shows that consumers who engage across multiple channels spent about 4% more in-store and 10% online. Moreover, businesses with robust omnichannel customer engagement strategies retain 89% of their customers versus 33% of companies with poor strategies.
  • Based on the data uncovered around business digital growth, the increasing levels of activities around the various parts of business transformation, including increasing budgets, there is clear evidence that businesses have not reached their peak in terms of digital growth.

Is Converting Consumers to Digital Solutions Still a Strategic Driver for Businesses at Large?

  • U.S. retailers are positioning themselves to take full advantage of the changing consumer needs by partnering with tech providers to enhance their digital footprint. A survey completed by DemandScience involving over 200 IT executives found that more than half of U.S. retail IT executives planned to upgrade their digital customer experience, leverage analytics-backed decision-making, and increase overall investments in AI.
  • About 52% of retailers are leveraging data to digitally engage consumers in-store to drive sales, 51% to drive rewards programs, and 47% to improve the customer experience. An estimated 45% of IT decision-makers indicate that inventory availability is a core consumer preference that drives tech purchase decisions, while 41% claim that personalized shopping experiences influence their choices, and 45% of the respondents noted that customers also prefer free, reliable Wi-Fi as a driver.
  • A recent Deloitte report discusses a mid-sized bank that launched a digitally native business product providing customers with a mobile-centric banking experience based on a new digital banking architecture. The new digital offering attracted thousands of new customers and has since become part of the company’s growth strategy.
  • Existing research shows that digital solutions continue to play a critical role in driving positive customer experiences, characterized by continuing adoption of digital solutions aimed at engaging and converting prospective buyers. These activities indicate that converting consumers to digital solutions is still a strategic driver for businesses at large.

2. Trends Expected to Have Transformative Impact on Both Consumers and Businesses in the Next 1-2 Years

The trends below were selected due to numerous mentions across business and market reports as being among the key trends anticipated to transform both businesses and consumers. The reports mentioning the trend include those published by Forbes, PR Web, EY, Deloitte, and McKinsey, among others.

The Metaverse

Continued Inflation, Rising Prices, & Supply Chain Security

  • In the U.S., inflation rates have soared to unprecedented levels pushing prices for daily purchases to luxury items up. Unfortunately, these negative trends will likely to impede the empowered consumer from embracing new retail trends and major trends like the Metaverse.
  • For instance, U.S. retail and consumer products (RCP) companies may be unwilling to invest in consumer marketing and engagement technologies in the wake of rising prices aimed at countering the effects of the pandemic, slow supply chains, talent shortages, and geopolitical conflicts.
  • Over time, RCP companies may fail to maintain demand for their higher-priced items, and consumers may view the increasing prices as a means for businesses to increase their profit margins.
  • Supply chain issues triggered by the COVID-19 pandemic have only worsened following the war in Ukraine. Businesses are therefore encouraged to heighten their supply chain resilience.
  • One way to strengthen their supply chain networks is by reducing exposure to volatile market prices and securing their supply chain networks through protective measures aimed at dealing with shortages and logistics costs. Other options include becoming self-reliant or finding alternative suppliers.
  • Hitendra Chaturvedi, a supply chain management professor with ASU’s W.P. Carey School of Business, noted, "We’re seeing inflation that we haven’t seen in 40 years, and our paychecks are not keeping up with the pace...this problem could potentially stretch out into the first quarter of 2023."

3. How Companies in Select Industries are Moving Strategically (Focusing their Efforts)

Financial Services Sector

Gig Economy: Food Delivery

  • Instacart is also expanding its suite of products and services. Some include new in-store tech for merchants and intelligent shopping carts — Caper Cart, powered by AI and equipped with Amazon Go-style technology to allow shoppers to shop for grocery items without scanning. The company also launched a new "scan and pay" solution that works with mobile devices.
  • Other solutions include Instacart+, Instacart's subscription model that costs $10 per month or $99 per year. In addition, the company offers in-app advertising features to allow brands to market their products in-app. Equally, the company is offering Carrot Warehouses that work as fulfillment centers for orders instead of collecting items off store shelves.
  • According to McKinsey, the industry looks promising, but a few factors underscore its growth potential. First, in the coming years, geographic competition among delivery apps has emerged as one of the major battlegrounds. As platforms widen the scope of their services, the battle will extend to restaurants, drivers, etc., all competing for the same market share.
  • The market will continue to witness the rise of new specialized delivery apps, such as Slice, for pizza and Hungry Panda, for Chinese food only. Another strategic focus area for the gig economy is the restaurant commission fees that remain contentious. Some local and state governments have imposed caps on those commissions, and some plan to make the caps permanent.

Healthcare (Large Healthcare Systems)

AI/Machine Learning technology

  • AI and ML have broader applications across industries, from manufacturing to helping mitigate climate change. As a result, its focus areas are expansive, and new user needs arise every time requiring AI intervention. AI experts at EY predict that AI focus is more concentrated in the customer service segment. In the manufacturing space, the concept of a digital twin and performing predictive maintenance on that digital twin are among the focus areas of AI and ML.
  • Businesses can leverage AI to create digital twins of a product, technology, or service user in the customer service segment. Next, they can explore the users' behaviors when using the product to get ahead of them and mitigate any issues that can arise through a proactive outbound experience.
  • AI and ML leverage intelligent applications to "solve classification, prediction, and control problems to automate, add, or augment real-world business use cases." The continued support for innovation has led to the rise in the adoption of AI and its use cases. The adoption of AI across organizations in the U.S. jumped to 55% in 2021 from 51% in 2020.
  • In the retail setting, AI can enhance operations by integrating with store-of-the-future technologies and solutions, combined with intelligent scheduling and forecasting, to mitigate the current challenges undermining the retail experience.
  • For example, in the U.S., getting a phone line activated can take up to an hour. About 40-50% of phone purchases happen in retail, and shoppers must wait for their phone lines to become active before leaving. AI can come to the aid and put that time to good use by either displaying customer-relevant ads or other informative advertising content.
  • Leading players in AI and ML, such as Microsoft and IBM, are continually enhancing and expanding their AI-driven products and offerings. For example, Microsoft has introduced new AI capabilities to its suite of tools and solutions. In addition, its AIaaS product suite offers consumers sophisticated capabilities like "high-quality vision, speech, language, and decision-making AI models." The company's AI offering seems to be performing well as evidenced by increasing revenues.

E-commerce Marketplaces

Mattresses and Beds

4. Smartphone Adoption Statistics in the U.S.

Smartphone Adoption Rates

  • In 2019, the U.S. smartphone adoption rate as per data shared by GSMA was 85% and is anticipated to reach 95% in 2025.
  • In 2021, the adoption rate throughout North America declined to 82% and is expected to reach 85% by 2025.
  • Another report claims that as of 2022, an estimated 85% of U.S. adults owned a smartphone.
  • 85% of men and women in the U.S. currently own a smartphone.

U.S. Smartphone Adoption Demographics

  • The U.S. smartphone adoption rates remain highest among the younger population and lowest among the elderly.
  • The ownership based on age in 2022 is as follows 96% among those aged 18-29; 95% among those aged 30-49 years; 83% adoption among those aged 50-64 years, and 61% adoption among those aged above 65.
  • Before the pandemic, smartphone ownership in the U.S. remained relatively high with 96% of those aged 18-29 owning a smartphone, followed by 92% of those aged 30-49 years, 79% among those aged 50-64 years, and 53% for those above 65 years.
  • Presently, 89% of smartphone adopters in the U.S. are urban dwellers, 84% are suburban dwellers, and 80% come from rural America.

Smartphones Digital Media Time

  • In the U.S., smartphones account for over 70% of the country's digital media time.
  • The most common digital media consumed on smartphones include games, accounting for 94% of digital time, 92% social media, and 83% entertainment.
  • Education (77%) and government (72%) remain the only forms of media users will rely on desktops and not smartphones.
  • In 2019, smartphones accounted for 70% of the nations digital media time, with mobile devices accounting for 77%.
  • The most popular categories included games, social media, and entertainment. The percentage share remains the same, implying that there has not been major changes in smartphone digital media time from 2019 through 2022.

Smartphone Adoption Based on Income

  • In the U.S., smartphone adoption varies with levels of income.
  • Thus, the rich are highly likely to own a smartphone compared to those with lower income levels.
  • In 2019, an estimated 29% of Americans earning less than $30,000 per year did not own a smartphone. Fast-forward to 2022, the percentage drops to about 24% of Americans.
  • Still, in 2019, about 44% of lower-income Americans did not have home broadband services, versus 43% in 2022.
  • Likewise, 46% did not have a traditional computer, versus 41% in 2021 who did not have a desktop or laptop.

Smartphone Dependence

  • Smartphone dependence in the U.S. for online access is high among younger generations, individuals with a high school education or less, and lower-income Americans.
  • In 2019, an estimated 22% of Americans aged 18-29 showed the highest reliance on smartphones, but the figure increased to 28% in 2022.
  • Hispanics were the most reliant on smartphones in 2019 at 25%, Blacks followed at 23%, and Whites at 12%. In 2021, the figures changed as follows, Hispanics 25%, Blacks 17%, and Whites 12%.
  • In 2019, the dependency rate among rural Americans was highest at 20% but declined to 17% in 2021.
  • Likewise, dependence among urban dwellers plateaued at 17% from 2019 through 2021, while for suburban dwellers, it declined from 13% in 2019 to 12% in 2021.

Research Strategy

For this research, we leveraged the most recent and trusted pieces of information published by leading market research and consulting companies like Business Insider, Biz Journals, Deloitte, Digital Commerce 360,, Fintech Magazine, Forbes, GSMA, Marketing Charts, McKinsey, Pew Research, PR Newswire, PR Web, PWC, Statista, TechCrunch, and The Drum, among other sources. Data specific to U.S. smartphone adoption rates appear to be changing gradually; however, some reports provide historical data for 2019 as 2022 because it is the most recent and up-to-date data on that particular matter. To consistently compare changes in consumer smartphone adoption, the team has leveraged similar sources updated at different time frames to ensure the accuracy of data and research methodology.

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