To coincide with CES, GfK has shared insights into current trends and what the year ahead will bring for the global consumer technology and durables (T&D) market. While 2023 did not meet expectations for recovery, the market is expected to return to positive territory in 2024.
“Early on, we predicted that 2023 would be a challenging year for the global T&D market due to ongoing inflation and pandemic-related saturation effects,” GfK insights expert for consumer technology and durables, Ines Haaga said.
“This was compounded by geopolitical tensions and wars, as well as persistently low global consumer confidence and reluctance to spend. As a result, the global T&D market is expected to end 2023 with a decline of 3% compared to 2022.”
Although year-on-year revenue for 2023 is down, it is still above the pre-pandemic level of 2019, mainly driven by the IT and Small Domestic Appliances (SDA) sectors, which performed well above 2019 revenues at 16% and 21%, respectively. Consumer Electronics (CE), on the other hand, remained weak.
Price and premium drive consumer demand
According to the global GfK Consumer Life study, price was an increasingly important factor in purchasing decisions in 2023. Retailers and manufacturers responded by extending promotional periods and offering more products at a discount. This gave consumers the opportunity to purchase higher-specification products that they could not afford at normal prices.
Alongside these price-conscious consumers, crisis-resistant customers with higher incomes have remained in the market. Premium products which make life easier have continued to outperform the market average over the last year.
For example, while the vacuum cleaner category declined by 2%, the wet and dry segment grew 2% year-on-year in the first 10 months of 2023.
Products that cater for individual’s specific lifestyles also performed better, such as air fryers for healthier cooking, growing 42%, or Bluetooth keyboards for home offices, up 17% compared to a decline of 2% for computer keyboards.
2024 outlook
After two years of decline, GfK expects the global T&D market to finally turn positive again in 2024, albeit at a small scale.
Almost four years after the pandemic, replacement cycles will kick in, especially for faster-moving categories such as smartphones and mobile PCs. Accordingly, the telecom category is expected to see growth in 2024 due to new purchases, with the trend continuing towards premium devices.
Long-term sales tracking shows that more TV sets are sold in the run-up to major sporting events. The 2024 Olympic Games and European Football Championship will therefore have a positive impact on the CE category.
Global divergence in market performance was already evident in 2023. The T&D market in the Middle East and Africa benefited from 7% revenue growth in the first 10 months compared to the previous year. However, China’s market struggled with deflation, the real estate crisis and low consumer confidence with revenue down 6%. This global divergence is expected to increase in 2024 as national GDP continues to grow in emerging regions like India, while China and the US slow compared to 2023.
Inflation is expected to fall further in 2024, which will boost global consumer confidence. However, interest rates will remain high, creating a barrier to investment.
“Price will remain an important purchase criterion for consumers in 2024. The results from key promotional events in 2023 prove that price promotions continue to drive sales. However, competing on price alone is challenging. Our recommendation for retailers and manufacturers is to ensure that their brand value remains stable in the eyes of consumers and to focus on features that deliver the right value for money,” Haaga said.