The 2023 picture
2023 has seen consumers continuing at a muted level of spending. Our full-year forecast for Consumer Tech & Durables (T&D) globally is for a slight decline in sales revenue (US dollars), compared to 2022 – currently tracking at -3.4%.
While nearly all T&D sectors will show some degree of decline this year, this is slowing compared to last year. The indications are that demand is starting to recover and that 2024, played wisely, presents opportunity for a wide-spread return to positive growth.
Stabilization, not normalization
Many shoppers are delaying their T&D purchases until they see an attractive price deal or inspirational product innovation. Until then, they are taking lower-cost options, such as buying product accessories, rather than replacing the product itself. Black Friday 2023 is likely to see discounts at levels beyond prior years, due to consumers holding their purchases for these events and retailers wishing to clear higher-than-average levels of old stock.
What will drive consumer spend in 2024+?
-
1. Product lifetime costsAlongside a product’s price, shoppers are also considering the operational costs across its full lifetime – it’s durability, repairability, energy use - together with its green credentials. The crucial question for manufacturers and retailers is: which factor takes the lead for consumers when buying specific types of products.
-
2. Making life easierRobotic, multifunctional, smart, and cordless products that are easy to use and make lives more convenient still outperform the category average this year. Further opportunities lie in smart functionality that includes AI that will automatically change appliance settings to save energy, based on the individual user’s lifestyle.
-
3. Individualism and the tailored experienceIndividualism and aspirational design continue to be purchase drivers, but “solutions looking for a problem” are out. People are keeping their ‘treat myself’ spend for products designed specifically for them as an individual or niche group. Examples include digital content creation, gaming, fitness, cooking, photography, and more.
-
4. Environment and sustainability.
71% of people around the world see “Global climate change / global warming” as a very or extremely serious issue. This affects consumer spending in two ways:
- Needs-based purchases to combat climate issues, such as electric fans, air purifiers and air conditioners.
- Values-based purchases that support products and brands that are eco-friendly.
By 2030, we estimate that 50% of consumers globally will be “eco-active shoppers”, wielding a potential spend of >$1,000 billion on FMCG and >$700 billion on consumer tech & durables.
Planning for 2024+
With brands in the middle of budget planning for 2024, our top recommendations to drive growth are:
1. Invest in targeted innovation (product & service)
Innovation continues to appeal but must deliver value that is directly relevant to the consumer’s life. Develop targeted, consumer-centric use-cases that show the benefits of upgrading to ‘affordable premium’ models.
2. Build up your brand to be a differentiator, as well as your product
The emotional connection between consumers and a brand plays a crucial role in competitive markets. Balance tactical activity with long-term, upper-funnel brand marketing that allows you to differentiate based on brand, rather than product or pricing alone.
3. Intensify manufacturer-retailer collaboration to optimize omnichannel category management
By teaming up to deliver consumer-centric planning that is unified across their respective merchandising, marketing, and supply chains, manufacturers and their retailers can optimise their mutual goal of creating a consistently personalised and enjoyable product experience at every touchpoint.
4. Planning for the upcoming shopper generation:
Gen Z will soon surpass millennials in size. Two-thirds are aged 15-24 and starting to frame opinions about brands. They consume 53% more content than the average but spend 50% less time on content than millennials. Like any generation, they include complex segments with differing demands.
5. Review regional and category footprint to capitalize regional growth opportunities and mitigate individual category risks
Each region has unique market, category, and consumer dynamics. Manufacturers and retailers must have a full view across all regions and categories, and map this against their own portfolio, to pinpoint where growth opportunities exist for their products.