The IT and Office market saw record demand in 2021 as businesses and households adapted to enable remote working and people spent much more time at home during the Covid-19 pandemic. In contrast, with global economies grappling with a range of market disruptions, many consumers and businesses reduced their IT and Office purchases in 2022.
Revenue in USD
But although revenue fell back somewhat in 2022, it remained significantly above pre-pandemic levels. In fact, in 2022 revenue was 28% higher than it was in 2019, demonstrating a remarkable period driven by rising prices. As the table below shows, there were only five categories (from 19 in total) that dropped back from 2019 levels.
And even though revenue did drop back in 2022, within every category some products and features were clear drivers of growth against their peers. In looking at the sector as a whole, four key themes have helped to drive growth for technical consumer goods during the year. In this article, we’ll explore how some of these themes have influenced the IT Storage and Peripherals categories and learn how retailers and brands can leverage them to get ahead in 2023.
Performance and Premium – Bigger, better, faster, more
Similar to other technology sectors, consumers looking to upgrade their lifestyles have contributed strongly to growth in IT storage and peripherals. High performance products and premium features have outpaced their standard peers consistently across categories. For example, whereas sales of most types of storage device have fallen in terms of number of units sold, sales of external solid-state drives (SSDs), which combine the convenience of external hard disk drives (HDDs) with the speed of already well-established internal SDDs, have grown steadily since 2019 and remained resilient to the disruptions of 2022.
A similar trend can be seen in the preference for high capacity storage devices, with external SDDs with over 2 TB of storage and internal SDDs over 1 TB growing much more strongly than their lower capacity peers. These higher capacities also became much more affordable as SSD prices in general decreased. There is also high demand for next generation technology for SSDs, with NVMe (non-volatile memory express) and PCIe 4.0 (peripheral component interconnect express) further gaining shares.
For peripherals, the preference for premium is particularly prevalent in gaming peripherals, with gamers prizing premium features alongside high performance. Although design and gaming specific features, like honeycomb mice and optical switches have not yet achieved a strong share of revenue, they could drive growth in the future.
Consumers are also increasingly drawn to products that can simplify their lives and will pay more for products that meet multiple needs or streamline an aspect of their life. For example, cordless technology is gaining ground across categories, with consumers favoring Bluetooth keyboards and mice in both the gaming and non-gaming sub-categories. Meanwhile, the demand for multi-device compatibility is another driver of growth for mice and keyboards. Put simply, people want IT peripherals to fit as seamlessly as possible into their lives, whether that’s by removing the need for messy cords or by allowing one product to work with multiple devices.
This desire for simplicity is also driving growth in smart home products and helping them to advance along the innovation adoption curve. Netcams have grown strongly as the use of cameras to monitor pets, or as part of home security efforts becomes common place.
Long-term trends providing tailwinds
In addition to these themes impacting consumer behavior, there are other trends that are expected to support the sector over the year ahead and into the longer term.
Demand from businesses remains resilient
Where B2C sales of IT and Office categories dropped back sharply in 2022, B2B sales in Europe were much more resilient to the disruptions plaguing markets. Businesses have been forced to adapt to new ways of working due to the prevalence of hybrid working models. This has supported demand as businesses update their IT systems to meet the changing needs of their employees and invest in their office space again now that employees are using it more frequently. This process will likely continue into 2023, making B2B sales a potential source of growth for brands and retailers.
We have also seen strong growth in demand for video conferencing systems from business customers. As employees increasingly return to offices for part of the week, communication technology has needed to adapt to a hybrid workforce, some people in the room and some dialing in. Businesses have found themselves needing to upgrade their conferencing solutions to cater to the needs of all their employees. The chart below shows how strongly they have grown since the start of the pandemic.
Huge growth in gaming
Gaming is already a hugely popular pursuit, and the gaming market is expected to grow dramatically in the future. This growth presents a compelling opportunity for brands and retailers catering to the demand for high-performance, premium gaming accessories.
The Metaverse is coming
The gaming audience is also expected to be early adopters of virtual reality and the Metaverse as it evolves. Within just a few years, people could start spending significant amounts of time in the Metaverse. This will open up vast new opportunities to furnish consumers with the accessories and peripherals to enable and improve their experience of the Metaverse.
A cautiously optimistic outlook
Although macroeconomic uncertainty is likely to dampen growth during 2023, there will be areas of opportunity for those who can tap into the factors driving demand from consumers. Businesses adapting to new working models are expected to support demand heading into 2023 and consumers are still willing to pay more for high-performance products, premium features, and products that simplify their lives. There are also many reasons for optimism looking further ahead, with the growth of gaming and the rise of the Metaverse expected to open up new segments of demand for IT accessories and peripherals.
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