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The rise of the silver surfer will boost technology further

The addressable market for technology companies has increased as older generations are forced to use the internet to keep in touch with people they love.

The addressable market for technology companies has increased as older generations are forced to use the internet to keep in touch with people they love.
Garry white employee

by
Garry White

in Features

20.04.2020

Now Granny knows how to Zoom, the global technology revolution is almost complete. A section of society that was reticent about the benefits of technology has been shown its substantial power. The simple act of keeping in touch with loved ones through video conferencing has brought millions of people from older generations into the new economy – with significant implications once this crisis ends. The billionaires of Silicon Valley will be utterly delighted.

The Office for National Statistics has carried out an annual online usage survey since 2011, which showed that adults aged 75 years and over are consistently the lowest users of the internet out of any age group. In 2011, just 20% of this cohort were recent internet users, but this jumped to 47% in 2019. Nevertheless, still more than half of people aged over 75 were not using online services last year.

The recently retired are much more active on the internet. Use in the 65 to 74 age group increased from 52% in 2011 to 83% in 2019, closing the gap on younger age groups. These figures are little changed for adults aged 16 to 44 years, where use is at its highest since the data series began.

The proportion of retired adults using online services increased by 27 percentage points between 2011 and 2019, resulting in 67% of the age group being active online last year. It is likely that the figure for 2020 will be substantially higher. This highlights a major long-term impact of the Covid-19 lockdown – trends that were already in place are accelerating.

Amazon founder further enriched

Lockdown has already made the world’s richest man even richer. Shares in Amazon hit a new all-time high this week, swelling the wealth of founder Jeff Bezos, who has an 11.2% stake in the $1.5 trillion business. His fortune increased by $6.5bn on Tuesday alone.

Recent events have been good for Mr Bezo’s wealth, but it is the older, more traditional retailers that are suffering greatly. Indeed, an increasing wave of bankruptcies lies ahead.

In the UK, we’ve recently seen Debenhams enter administration for the second time in a year. Its management plans to try to "re-open and trade as many stores as possible" when lockdown restrictions are eased, but its 11 Irish stores will close for good. Kath Kidson, Oasis and Warehouse have also collapsed into administration in recent days.

The crisis at Britain’s retailers will get worse every week the lockdown continues. Data released yesterday showed that UK retail sales fell at their fastest rate on record during March. According to the British Retail Consortium (BRC), sales plummeted 4.3% year-on-year – the worst decline since data started to be recorded in January 1995.

Feast and famine

Before the March 23 lockdown, fear of future shortages resulted in retail sales jumping 12%, as people stockpiled goods they deemed essential. After the lockdown was introduced, sales plunged by 27% year-on-year.  "The crisis continues; the retail industry is at the epicentre and the tremors will be felt for a long while yet,” BRC chief executive Helen Dickinson said. “Many physical non-food retailers have been forced to shut down entirely or to limit themselves to online only to protect customers and staff.”

The pattern of retail spending over the month should surprise few. Sales of fashion and shoes plummeted, while computers, board games and fitness equipment all saw demand increase. Online operators with good distribution networks – which are usually larger businesses – benefited greatly.

Online is a winner

It’s not just the internet-based retail behemoths that have seen a boost from the lockdown, many other businesses that operate online have seen an increased demand for their services. This week, Barclaycard reported an 18% jump in payments for digital subscriptions to services such as Netflix and Now TV at the end of March. Video-game companies have also seen a leap in sales.

With hindsight, The Walt Disney Co timed the launch of its online subscription service Disney+ very well indeed. Its streaming service has now attracted 50 million subscribers since its launch just five months ago. This compares with 26.5 million subscribers when it last updated the market in February, so it has almost doubled the number of paying users in just two months. This will make up for at least some of the lost revenues from the closure of theme parks such as Disney World.

Once this crisis is over, many of the changes in people’s lives that they have made in the last, frenetic few weeks will remain. The new silver surfing generation will be potential new customers for all sorts of businesses. Although the billionaires behind Californian and Chinese technology giants are clearly major winners, smaller companies that recognise these trends can benefit too.

Ordinary business can use the trend to encourage its older customers towards digital communications – saving substantial costs in print and post. But those with a more proactive approach have a substantial opportunity.

This week, Lloyds Banking Group said it planned to provide up to 2,000 customers over the age of 70 with free tablet devices and it has set up a dedicated phone line to provide training and support to help vulnerable people access online banking. Although small, this is exactly the type of thing old-economy businesses should be doing to compete in the now turbo-charged internet world. The power of the silver surfer is on the rise; businesses that fail to change with the market do so at their peril.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

A version of this article appeared in Friday’s Daily Telegraph.

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