Consumer Tech & Durables – Outlook 2024

After successive improvements quarter by quarter, the final three months of last year saw Consumer Tech & Durables finally flip into growth (+2.3% compared to Q4 2022). This was driven by demand within telecom (+5.9% Q4 2023 vs Q4 2022), MDA (+4.9%) and SDA (+4.7%), which more than counterbalanced the tougher situation felt by IT, office, and consumer electronics. 

2024 is all about producing the best value for consumers at the right price, as manufacturers and retailers compete harder than ever to win the battle for mental and physical availability.  

With money-conscious consumers continuing to shop around and weigh up every purchase, it can be tempting for brands to discount prices to drive volume of sales. We saw this last year, with the top seven annual promotional events* including brand events increasing in duration to cover 15 weeks of the year – up from 11 weeks in 2019 (*Christmas, New Year, Black Friday, Cyber Monday, 618 and Double-11, Apple event, Prime Days). However, competing on price eats into margins and risks getting sucked into price races.  

An alternative is focusing on innovation to help stand out from your competitors. By adapting products or services to fit the needs of specific customer segments, companies can diversify their revenue streams and fuel growth. 

Innovation does not have to be about radical or big changes. It is often the incremental progress that steadily adds features, convenience, and performance in pace with consumers’ changing lifestyles that is more important. Indeed, history shows that brands that continually invest in innovation perform better over the course of market downturns. As we head into a stabilizing landscape, we see incremental innovation that pinpoints specific audiences’ needs as a key factor in uncovering new pockets of demand.  

With consumer spend on tech goods gradually improving, there is opportunity now for brands to refocus on higher-end products that offer consumers an improved user experience, and attain greater margin. Consumer confidence is still fragile, but there are target groups that are buying higher-end items when these present greater relevance and value, in return for the extra money spent.

Last year, premium brands took 3 in every 10 dollars that consumers spent on tech and durables. They also maintained their year-on-year sales revenue, performing far better in this respect than entry-level brands and marginally better than standard brands.  

A key element in this is the role played by brand strength. Strong brands typically enjoy higher levels of consumer trust and loyalty. This can play in their favor when consumers are weighing the benefit versus risk of buying a higher-priced item.  

However, the importance that consumers place on brand changes depending on the product in question. To successfully persuade consumers towards products that offer greater value, but at a higher price, it is critical to tailor the marketing communication correctly between brand image and product value offering. 

In telecoms, consumer electronics (including photo), and SDA, premium brands hold a significant share of sales and were more resilient in maintaining their sales revenue last year than entry level brands. In these sectors, consumers continue to prefer brands with flagship products that generate trust in quality and performance – and are willing to pay more for that.  

By contrast, MDA stands out as the sector that saw premium brands perform much worse than entry level or standard brands last year. Consumers are less emotionally attached to products such as washing machine or dishwasher, compared to a smartphone. When buying an appliance, their focus is more on functions such as energy efficiency and performance – and this makes it more likely that they will consider lower- or non-premium brands that offer similar feature sets. Other effects play a role as well. For example, lower income groups are starting to come back to the markets having postponed non-essential purchases during recent difficult years. These groups are likely to choose entry level or standard brands that offer sufficient feature sets at a lower price.

Consumer demand is also continuing around higher-end products that deliver enhanced performance in areas such as capacity, speed, connectivity.  

In the home appliances sectors, 25% of sales revenue across MDA and SDA now comes from smart appliances – and sales revenue from these grew +3% last year compared to the total market -1%.  

The importance of health & fitness for consumers has increased significantly. Globally, people now rank health & fitness as their 4th most important personal value out of a total of 57 listed values – up 8 places since 2019.  

This trend was originally heightened during the pandemic but continues to be highly relevant today. The approaches can vary while for some it can be preventative for others it could treatment. Similarly, some set of consumers focus on physical well-being and nutrition whereas certain others would be focusing on mental well-being. Consumers continue to place importance on a more holistic approach to well-being, and this is now an integral part of their mindsets and aspirations around how they wish to live.  

Products that enable consumers to live a healthier lifestyle are outperforming their category, with examples including hot air fryers (+38% revenue growth vs. fryers overall at +35%) and washing machines with steam function (+5% growth, vs. category overall -2%). 

Greater consumer focus on health and wellbeing is also driving consumers toward smart- or AI-driven products that enable closer monitoring of health and enhance performance. This can be seen most strongly in the wearables market, where products in the last few years have transitioned from fitness trackers to smart & health trackers.  

These innovative products offer a new level of convenience and accuracy, allowing consumers to track aspects like sleep, blood pressure etc. right from their pockets or wrists. 

Sustainability is a core, long-term opportunity that has evolved to unite two deep-rooted consumer aspirations: to protect our planet, and to save money.  

For consumers, sustainability claims now encompasses not just basic credentials such as recycled and recyclable materials and packaging, but also the wider concepts of energy and water efficiency, ‘circular economy’ business models, refurbished products, food miles and more.  

When it comes to reducing consumption and waste, energy efficiency is perhaps one of the best opportunities for technology brands. For MDA categories, for example, energy austerity is clearly pushing consumers towards buying best-in-class labeled appliances to save energy in the long run.  

Refurbished goods too are an exciting avenue for brands, appealing simultaneously to those most concerned about climate change and those most concerned about the cost-of-living.  

Globally, 27% of shoppers purchased something second hand instead of new in last 12 months, with growing demand in areas such as telecom. There is also increasing opportunity in MDA.

In the UK, for example, 25% of smartphone buyers chose a refurbished or second-hand model last year - up from 19% in 2021. Most of these cited finance as the primary motivation for their choice. Buyers under 35 years old, however, while still driven primarily by price, are more likely to mention impact on the environment (9%) as a reason to buy refurb or secondhand phone. Currently, this is a “nice to have,” rather than a key incentive.