Dive Brief:
- Signaling further decline in electronics demand, consumer tech sales revenue in the U.S. could dip by 2% year over year in 2024, a new Circana report predicts. The report attributes the decline to broader macroeconomic conditions and poor performance in the first half of this year.
- Despite the overall decline, Circana’s report anticipates growth among personal computers, large TVs and tablets. As consumers upgrade the computers they bought early in the COVID-19 pandemic, the need for replacements will fuel a wave of computer purchases over the next two and a half years, Circana said.
- The holiday season is projected to kick off a boost in large TV sales and the category could continue to grow over the next two years, per the report. Circana also noted that the increase in tablet sales in late May and June led it to raise its tablet projections, a trend driven in part by new tablet capabilities.
Dive Insight:
Though consumer tech sales are expected to decline this year, the creation of new products will help to drive consumer demand in the consumer tech market, Circana said in its report. Attracting consumers, especially younger consumers, will require companies to focus on affordability, as younger demographics are under pressure from student debt, high rent and other financial stressors, Paul Gagnon, vice president and technology industry adviser at Circana, said in a statement.
“As we reach the midpoint of 2024, it’s clear that many of the economic pressures from late 2023 and early 2024 are still impacting consumer spending,” Gagnon said in a statement. “While unemployment remains low and real wage growth has been positive, high credit card debt and mortgage interest rates continue to strain consumer finances.”
Indeed, a survey from Forter and Talker Research found that almost two-thirds of online shoppers had changed their spending habits due to price increases.
Beyond Circana’s research, other indicators are showing softer demand for electronics and the lingering impact of inflation on consumer spending. According to data from the U.S. Department of Commerce’s Census Bureau, year-over-year sales of electronics and appliances have grown in recent months, but that follows a long string of consecutive declines. Best Buy’s sales have also suffered amid weak consumer tech demand and challenging economic conditions. The company’s latest fiscal year revenues fell by 6%. Its revenues fell 6.5% year over year in its most recent quarter.
The electronics chain has introduced new shopping features and updated its branding to attract shoppers and drive growth. Best Buy updated its color palette and introduced a new hologram spokesperson named Gram, who will appear in TV, online and social media marketing. The retailer also added new shopper personalization and product discovery features to its mobile app, including customized push notifications, a Shop with Videos feature and a personalized homepage.
