2024 TCG outlook: navigating uncertainty and staying focused on opportunities
The global economy showed remarkable resilience throughout 2023 as it continued its gradual, uneven recovery from the Covid-19 pandemic, followed by the multiple blows of the cost-of-living crisis and ongoing war in Ukraine. Despite this resilience, we move into 2024 challenged by multiple economic headwinds and facing fresh uncertainty from global conflicts and fragile geopolitics, a slowdown in the Chinese economy and knock-on effects from monetary policy tightening. The IMF (as of its October 2023 forecast) has projected global GDP will slow to 2.9% in 2024, down from 3% in 2023 and well below the 21st century average of 3.8%.1 Divergences are appearing across the world’s economies: emerging markets are propping up global economic performance, while developing economies as a whole are lagging behind.
Higher interest rates, as a result of central banks' actions in many parts of the world, have helped to slow inflation from levels not seen in decades, but core inflation is proving stubbornly hard to shift. Meanwhile, China’s currency is teetering on deflation. The world’s largest exporter and second largest economy, China is facing multiple economic headwinds which are likely to cause wider disruption. Consumer confidence also remains at historical lows due to the cost-of-living crisis and ongoing uncertainty. Global trade and supply chains, after stabilizing in 2023 following pandemic-related disruptions, face further economic turmoil in 2024 due to obstructions of shipping lanes in the Red Sea and the risk of higher oil prices. The risk of further abrupt monetary policy tightening, coupled with slowing world economic growth and a fractious geopolitical situation, has set the scene for a challenging year ahead for businesses.
On the upside, business and consumer sentiment could be set to receive a boost from the coming year's big events, from sporting tournaments to political elections. This can inject a range of emotions from dismay to positivity into the consumer outlook. Eight of the 10 most populous countries (including India, Brazil, the United States and Russia) will hold elections, and the Paris 2024 Summer Olympics and Euro 2024 soccer tournament will take place. Big events have the power to boost spending, from incumbent governments seeking to win over voters with incentives and economic stimuli, to sales promotions linked to the sporting events.
2024 will present economic challenges, but also brand opportunities. Those that use data and insights to uncover opportunities and capitalize on them will find avenues for growth in a tough global market. It’s especially critical for brands not to let short-term disruptions and uncertainty sway them from long-term goals. Here are some of the key risks and opportunities for brands to consider as 2024 unfolds.
Knock-on effects from the Chinese economy
After China reopened following its strict Covid-19 containment measures, its economy initially looked buoyant. Yet multiple economic headwinds – a weaker currency, high youth unemployment and a property sector crisis – led to a downgrade in projected GDP growth to around 4.2% in 2024.2 Although these are numbers many economies would welcome, they are far lower than China’s full economic powerhouse potential.
China has recently ramped up its manufacturing capabilities relating to the big three of electric vehicles – batteries and solar panels – as well as household appliances and electrical goods. Its trade surplus is already leading to tensions with key trading partners including the US and the EU and shaping the domestic market, making it harder for overseas brands to make inroads into China.3
Especially in home appliance categories, Chinese brands will likely continue to grow in 2024, by offering feature-rich, good value-for-money products. This poses challenges for established consumer brands. A forward-looking innovation pipeline, strong supply chains, collaborative retailer relationships and both tactical and strategic marketing strategies are more important than ever in the face of increased competition.
Consumer confidence shows early signs of recovery
Broadly speaking, consumer savings built up during the pandemic have largely dried up, revenge spending is over and interest rates are starting to hit household budgets. This has created a tough economic outlook for 2024, particularly given that access to credit has become more expensive for individuals and businesses. Globally, consumer confidence in OECD countries sits below the long-term historical average and despite showing signs of stabilization around the middle of 2023, it hit a downward trajectory towards the end of 2023. OECD countries’ combined buyer confidence sits at 98.0 as of November 2023, higher than the January 2023 level of 97.5.4 December numbers recorded by the EU commission indicate a moderate improvement in the euro area as of December, and in the US, optimism was restored at the close of 2023, driven by positive sentiment toward business and employment conditions and incomes, and reduced concern over high interest rates.5
A number of factors contribute to consumer confidence, including expectations for job markets, the political climate, prices of consumer goods and personal financial situations. In Poland, for example, consumer confidence was boosted by the election of a new government late last year. Meanwhile, Türkiye’s consumer confidence is one of the lowest amongst OECD nations, driven by rampant inflation, which is projected to fall to 46% by the end of 2024.6
Consumer expectations is the key word here, and if consumers can remain resilient as they were in 2023, and with economic indicators such as inflation and job markets continuing to stabilize, buyer confidence could bounce back in 2024. Nevertheless, regional differences continue to be pronounced and need to be taken into consideration in the early planning stages.
The outlook for TCG amid slow global growth
TCG categories mirror the picture of slow recovery and regional and category variations. In 2023, the market continued to stabilize after an unprecedented level of sales during the pandemic, driven by consumers cooking, studying, working and entertaining at home more than ever before. The total TCG market has grown +4% in revenue terms since 2019 – with small domestic appliances and IT categories growing the most – but is down -3% year-on-year.7 In late 2023, the market showed signs of stabilization which will likely continue in 2024. Slightly positive growth is feasible, although significant growth remains unlikely.
As many aspirational product upgrades – or first-time appliance purchases, such as Air Fryers – already occurred during the pandemic, faced with economic turmoil, consumers will most likely show more caution with spending. Consumers are not all equal, but generally have the ability to adapt to difficult circumstances if there is sufficient incentive for them to purchase – which could range from the right price when their old appliance breaks down to the incentive to save money via an energy-saving appliance.
Now almost four years on from the first pandemic lockdowns, products such as smartphones, laptops and PC accessories purchased at the start of the pandemic will soon be ready to be replaced or upgraded. Other categories are lagging in their replacement cycle, for example, consumers will unlikely want to upgrade their TV if they already did so during the pandemic.
Other categories are clearly impacted by external demand factors and market dynamics. For example, ongoing high interest rates in Europe have dampened demand for new dwellings and large renovations, which means that built-in-kitchens in the major domestic appliances sector are experiencing a downturn.
Overall, the TCG market outlook for 2024 will primarily lean toward necessary and well thought-out purchases rather than aspirational upgrades.
Longer term, it is important for brands to continue to innovate with purpose and invest in meaningful product pipeline development. The global market for technical consumer goods, estimated to be worth around $1.2 trillion on an annual basis, is not only diverse but ripe with economic opportunities as population growth continues, along with the increasing dominance of the global middle class.8 It is projected to be spending $62 trillion annually overall (three times the upper class) by 2030.9
Where the opportunities lie
In the midst of uncertainty, it’s important for brands not to lose sight of their priorities and long-term goals. It starts with understanding consumer behavior and adapting to their changing needs, and tapping into the current industry trends:
Affordable premium will continue to be a trend through 2024, as ongoing inflationary pressures and loss of real income cause consumers to seek a sense of luxury at lower prices. Smaller ticket technology items like soundbars, headsets, SSDs and keyboards could remain popular – particularly as the IT category tends to outperform in poor financial climates. In other categories, strong value for money propositions will be highly sought after. This cautious optimism from consumers can be catered to by offering a broadly priced portfolio of products.
Promotions will continue to play an important role. Timing of promotional activities should coincide with big events, such as the Paris Summer Olympics. The major promotions of Black Friday, Cyber Monday, and China's 618 and Singles' Day, will also continue to be important.
AI: While the privacy and ethics of artificial intelligence (AI) must be closely managed, it holds exciting potential for businesses. As well as productivity and efficiency gains, AI will help brands offer a more personalized shopping and product experience to consumers.
Refurbished goods are another exciting avenue for brands – there’s growing demand for refurbished items in TCG and telecoms in particular. Refurbished goods attract both sustainability and price-conscious consumers – appealing to those most concerned about climate change and the cost-of-living simultaneously.
Sustainability is another big long-term opportunity. 46% of consumers now consider the environment “all or most of the time”, which has increased by 13 ppts over the last decade, showing a clear appetite for sustainable products.10 Brands that can evidence their sustainability claims, and pitch their products at the right price point, have significant potential to succeed in 2024 and beyond.
It’s not an easy time for brands in almost any TCG sector. Though the threat of recession seems to have passed for most countries, and inflation has been brought under better control, the significant disruptions of the last few years have taken a heavy toll. Even so, with new areas of opportunity emerging, and pockets of optimism across the globe, the consumer resilience shown to date may continue to surprise brands.
In the midst of uncertainty, reliable data and timely insights will help savvy brands retain their share of squeezed consumer spending. Staying ahead of developments on the global stage can help them capitalize on opportunities before competitors.
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1IMF Global Economy Real GDP growth rates vs. Previous year (in %) | Updated Oct 2023
2 IMF Global Economy Real GDP growth rates vs. Previous year (in %) | Updated Oct 2023
4OECD, Main Economic Indicators, Volume 2023 Issue 12, p.25
7Total Sales Value USD Jan-Nov 2023, excl. North America
8GfK Market Intelligence: Sales Tracking and total market estimation incl. North America, based on USD, Forecasting date: November 15, 2023, assuming stable USD exchange rate
9Source: The Brookings Institution, May 2021. Wolfgang Fengler, Homi Kharas.
10GfK Consumer Life, 2023 global survey
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