GfK has assessed the consumer technology and durables (T&D) market and provided its analysis to coincide with the leading global tech trade show, CES. While the 2022 results look weak, the T&D market is expected to recover and stabilise in 2023.
“We have already predicted that the pandemic-related record sales of 2020 and 2021 would not be sustained and that the global T&D market would stabilise at a certain point. However, the turnaround in 2022 was stronger than originally expected, influenced by numerous macroeconomic factors, such as the war in Ukraine, high inflation rates and consumer confidence at record lows,” GfK expert for consumer technology and durables, Ines Haaga said.
“Between January and October 2022, the global T&D market already faced a deceleration of more than 7% compared to the same period of the previous year, standing at a total value of US$680 billion (A$978 billion) trend is unlikely to recover in the full-year results for 2022, but the forecasts for 2023 are more promising.”
When making purchasing decisions, T&D consumers can generally be divided into two categories: those who need to buy to replace a broken product, and those who want to buy.
According to gfknewron, consumer priorities shifted in the third quarter of 2022 as the inflation crisis hit. More consumers moved from the second to the first group at this time, with a corresponding decline of 1.4% in the numbers giving ‘upgrading a working product’ as the reason for making a purchase, compared to the first quarter.
In addition, consumers are turning to cheaper alternatives within their preferred segment, whether that is in the entry or premium level. However, purchases made by low-income consumers are losing significant weight in the global market as they reach budget limits and therefore hold back on making non-essential purchases in the T&D segment.
Looking at the premiumisation trend, which has been a key growth driver in recent years, this is slowing down on a global level. While the decline of premium purchases in the Asia Pacific (APAC) region is still relatively stable, down 2% from January to October 2022 compared to the same period last year, premium brands in the EMEA region are suffering a sharp downturn of 11%. On a global level, this results in a decline of 5% for T&D premium brands overall.
“After a difficult year, expectations for 2023 are more positive. GfK forecasts a stabilisation of the global revenue growth within the T&D market standing in the low single digits,” Haaga said.
“Performance continues to be a success factor as consumers still attach great importance to value for money in their purchasing decisions, whether they need to buy or want to buy a new device. Sales in the telecommunications category will increase as the replacement phase for smartphones bought at the beginning of the pandemic kicks in.”