Dive Brief:
- The U.S. consumer tech market is bracing for a 2% decrease in sales revenue by 2024, according to a recent Circana report. The report attributes the decline to broader macroeconomic conditions and a rocky first half of the year.
- Amid the overall decline, personal computers, large TVs, and tablets are expected to see growth. As consumers upgrade their early pandemic computing equipment, the demand for replacement computers is expected to surge in the next two and a half years.
- The holiday season will likely trigger a boost in large TV sales, and the category could continue to expand over the following two years, according to the report. Circana also observed an increase in tablet sales in late May and June, leading to an upgrade in their tablet projection, a trend stimulated, in part, by enhanced tablet capabilities.
Dive Insight:
Slump in US consumer tech sales anticipated for 2024, predicted to descend by 2%: Circana's Forecast
While consumer tech sales may see a downturn, new product innovations will help sustain demand in the market. To attract shoppers, particularly younger consumers, companies need to prioritize affordability as younger demographics face financial strain from student debt, high rent, and other financial pressures, Paul Gagnon, vice president and technology industry advisor at Circana, suggests.
Gagnon highlights that lingering economic pressures are still impacting consumer spending, with unemployment remaining low, but credit card debt and mortgage interest rates putting strain on consumer finances.
Indeed, a survey by Forter and Talker Research reveals that nearly two-thirds of online shoppers have adjusted their spending habits due to price increases.
Beyond the Circana report, other indicators hint at a decrease in electronics demand and the impact of inflation on consumer spending. Sales of electronics and appliances have grown in recent months, according to data from the U.S. Department of Commerce's Census Bureau, but this growth follows a prolonged string of declines. Best Buy's sales have also taken a hit, with their latest fiscal year revenues falling by 6% and a further 6.5% decrease in sales in the most recent quarter.
Best Buy has responded to the challenging market conditions by introducing new shopping features and revamping its branding. The retailer has updated its color palette, introduced a new hologram spokesperson, Gram, for marketing purposes, and introduced personalized features for its mobile app, such as customized push notifications, a Shop with Videos feature, and a tailored homepage.
Enrichment Insights:
1. Smart Home Integration
- Consumers are seeking smart and connected devices that can seamlessly integrate with smart home systems, such as personal computers, large TVs, and tablets, via Wi-Fi, Bluetooth, and voice assistance technologies.
2. Technological Innovation and Product Advancements
- Continuous innovation and R&D in consumer electronics lead to products with advanced features like OLED and Mini LED displays in TVs, increasingly powerful computers, portable, and feature-rich tablets.
3. Growth in Modernized and Connected Households
- The modernization of homes with smart devices increases the demand for devices like large TVs, tablets, and PCs that fit in the smart home ecosystem.
4. Rising Adoption of E-Commerce and Accessible Pricing
- The growth of e-commerce platforms makes consumer electronics more accessible by offering a broader range of products at competitive prices to a wide audience.
5. Broader Industry Trends and Market Growth Dynamics
- The consumer electronics market is projected to grow at a CAGR of around 5% to 8% through the late 2020s, driven by innovation cycles, sustainability, and eco-friendly features in new products.
- The weather of consumer tech market forecasts a 2% decrease in sales revenue by 2024, as revealed in a recent update by Circana.
- In contrast, personal computers, large TVs, and tablets are anticipated to see growth, with a demand surge for replacement computers expected in the next two and a half years.
- The holiday season will probably trigger a boost in large TV sales, and the category may continue to expand over the following two years, as suggested by Circana.
- Tablet sales saw an increase in late May and June, stimulated by enhanced tablet capabilities, according to the same report.
- Paul Gagnon, vice president and technology industry advisor at Circana, suggests that companies should prioritize affordability to attract younger consumers, who face financial challenges.
- Economic pressures, including low unemployment but high credit card debt and mortgage interest rates, are still impacting consumer spending, as observed by Gagnon.
- In a survey by Forter and Talker Research, nearly two-thirds of online shoppers have adjusted their spending habits due to price increases.
- Other indicators hint at a decrease in electronics demand and the impact of inflation on consumer spending, such as recent sales growth of electronics and appliances following a prolonged string of declines.
- Best Buy has faced challenging market conditions, with their latest fiscal year revenues falling by 6% and a further 6.5% decrease in sales in the most recent quarter.
- To counteract the market challenges, Best Buy has updated its color palette, introduced a new hologram spokesperson, Gram, for marketing purposes, and added personalized features to its mobile app.
- The growth of e-commerce platforms contributes to making consumer electronics more accessible, offering a broader range of products at competitive prices.
- The consumer electronics market is expected to grow at a CAGR of around 5% to 8% through the late 2020s, driven by innovation cycles, sustainability, and eco-friendly features in new products, as well as the shift towards smart and connected devices in smart home systems.
