According to GfK, demand of Consumer Tech & Durables (T&D) is starting to recover and 2024, played wisely, presents opportunity for a wide-spread return to positive growth. «Many shoppers – the company experts explains – 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».

GfK also predicts four markets drivers for 2024: “Product lifetime costs”, “Making life easier”, “Individualism and tailored experience”, “Environment and sustainability”. Regarding the first driver, the company explains that «alongside 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».

“Making life easier” is a frequent people request. So robotic, multifunctional, smart, and cordless products still outperform the category average this year. «Further opportunities – GfK says – lie in smart functionality that includes AI that will automatically change appliance settings to save energy, based on the individual user’s lifestyle».

IFA 2023 was the occasion for GFK experts to present the recent sector trends. According to the company’s data, Tech and Durables products (T&D) are recording a negative trend. The sector closed the first six months of 2023 with a value decline by -6.3% to 390 billion US dollars compared to the same period last year. Looking ahead to the full year results, GfK forecasts value change of -3.4 percent overall, due to ongoing market saturation and slowing demand.

«Within the overall sale – commented Nevin Francis, GfK expert for the T&D industry -, traditional retail regained market share, while online rebalanced after a surge in share during peak sales months. 35 percent of global T&D sales were made online in the first half of 2023, down 5 percent from last year. While this slight drop does not disrupt the long-standing trend toward omnichannel retail, it does make the need for an omnichannel strategy more important than ever.»

Looking at specific segments data, GfK reveils that revenues declined by -12% for Consumer Electronics, by 5% for Major Domestic Appliance and by 1% for Small Domestic Appliances. Even Telecom and IT devices recorded a fall in value, respectevely by 5 and 12%.

Gfk made an analysis about sustainability and appliances to understand if sustainability is already a core driver for global Tech and Durables shoppers. In 2022, pollution still was among the top five concerns in 13 of the 22 countries surveyed in the global GfK Consumer Life study. The company’s experts take a look at how sustainability and consumers’ environmental demands are influencing the global Tech and Durables (T&D) market. It forecasts that by 2030 50 percent of the world’s population will be eco-active, with a potential global spend of over 700 billion US dollars on Consumer Tech and Durables.

Despite short-term disruption, environmentalism continues to be a fast-growing, long-term personal value among consumers. There is a widespread belief that young people are the most concerned about climate change, but the biggest increase in concern since 2021 has actually been among those aged 60 and over. One in five of this group researched companies’ environmental practices in 2022 – that’s up 6 percentage points from the previous year – and nearly 50 percent of them “travel green”.

«It is very likely that a company’s environmental credentials, such as its carbon footprint, alone do not easily justify a premium price to consumers – says Norbert Herzog, GfK expert for Consumer Tech and Durables –. Durability and energy efficiency are key factors for Tech and Durables shoppers who are looking for overall saving in the lifetime cost of their devices, as well as being greener in their product choices.»

According to GfK experts, global market for Consumer Technology and Durables is expected to stabilize in 2023, after deceleration in 2022. In a regional comparison, the 2022 picture is thoroughly divergent at present. Looking at the turnover in US dollar terms, the positive lights are mostly coming from Emerging Asia (without China), which stands at +13%.

However, comparing January to October 2022 with the same period last year, some European countries are developing less negatively in local currency than in US dollar terms – for example, Germany, which shows a small growth of +1% in euro terms. This is mainly due to the current strength of the US dollar compared to the euro. However, these unfavorable exchange rates will continue to drive up procurement prices, thus leading either to increased prices for end consumers, to reduced profit margins for retailers and manufacturers selling in Europe or even to both effects.

«We have already predicted that the pandemic-related record sales of 2020 and 2021 would not be sustained and that the global T&D market would stabilize at a certain point – explained Ines Haaga, GfK expert for Consumer Technology and Durables -. However, the turnaround in 2022 was stronger than originally expected, influenced by numerous macroeconomic factors, such as the war in Ukraine, high inflation rates and consumer confidence at record lows. Between January and October 2022, the global T&D market already faced a deceleration of more than 7 percent compared to the same period of the previous year, standing at a total value of 680 billion US dollars. This trend is unlikely to recover in the full-year results for 2022, but the forecasts for 2023 are more promising.»

After a record 2021 for the consumer technology sector, the Italian market continues to record a positive trend but we can see the first signs of a slowdown. According to GfK surveys, sales grew by 0.7% and the overall market value reached 6.4 billion euros in the first five months of the year. If we compare the data with the pre-pandemic period we can, however, we note a very strong growth (+18.7%) compared to the same period in 2019.

The very positive performance of the Consumer Electronics sector (+30.9%), which includes decoders (+248%) and above all TVs (+31.6%), is driving the growth of the market; the latter, favored by the demand linked to the switch-off, generate 13.7% of the total value of the Italian market. If we exclude them, the market would show a negative trend compared to last year (-2.9%).

Analyzing the other sectors, we record a slightly negative trend for Major Domestic Appliances (-0.5%) and Small Domestic Appliances (-0.8%), while Telephony shows a slight growth (+0.7%) and is confirmed as the most important sector by turnover with a weight of 34% on the total.

On-line sales performed better than sales in physical stores (+5.2% compared to -0.8%) and continue to grow in terms of weight, reaching 25.7% of the total turnover generated, against 24,6% of the period January-May 2021 and 24.2% of the total for the year 2021.

According to GfK European retail study, in 2021 the retail sector in the 27 countries of EU grew by 6.8 percent. In 2020 the turnover growth was of 1.5 percent. As regard the single markets, the company underlines that the highest growth rates were recorded in smaller Eastern European countries such as Lithuania (up 17 percent), Slovenia (up 16 percent) and Estonia (up 13 percent). Larger markets such as France, Spain and Italy also all recorded retail growth rates of over 7 percent.

Driver of retail value increase were the non-food segments. «Despite the pandemic and a difficult market environment, the past two years have been quite successful overall for retailers from a sales perspective – explains study lead Philipp Willroth -. However, city center-relevant retail, especially sectors such as clothing, footwear or jewelry, is still suffering badly in many European countries. This is because online retail is gaining more and more ground, especially in high-growth regions in Europe, which is why new digital offerings will also have to be tested in city center retail in the medium term.»

The nominal purchasing power of EU citizens grew by an average of 2.4 percent in 2021. After many non-euro countries such as the Czech Republic, Croatia and Norway had to contend with reduced purchasing power in 2020, which was also due to exchange rate effects, many of these countries were able to benefit from both better macroeconomic development and a strengthening of their national currencies. Accordingly, purchasing power in 2021 grew by more than 5 percent in each of the first two countries, and by over 8 percent in Norway.

After the good performance of 2021 (+12%), this year is recording a deceleration for the consumer tech and durables segment. According to GfK, in the first two months of the year, revenue already declined by 3 percent compared to the same period last year. These are GfK’s findings ahead of the international TCG Summit in Vienna.

«Against the backdrop of a weakening market, it is now even more important for retailers and manufacturers to identify growth potential and secure their margins – says Ines Haaga, GfK expert for technical consumer goods -. Companies must adapt to consumer product preferences to continue to be successful in 2022.»

Among the most important drivers, we still see premiumization and simplification products. According to Gfk experts consumers often choose innovative solutions and devices that promise improved features or additional functions. These include robot vacuum cleaners with docking and charging stations, which started 2022 with a 182 percent increase in revenue compared to the same period last year. Ultra-thin notebooks less than 18 millimeters thick (plus 7 percent) and TVs with a screen diagonal larger than 65 inches (plus 13 percent) also saw above-average growth despite their higher price point, outperforming the cheaper entry-level models.

Simplification and multifuntionality are other two leading trade. The simplification trend is evident across smart home products, among others. Home automation products saw an overall growth of 15 percent in seven EU countries from January to February 2022. These include, for example, smart thermostats for automatic temperature control, motion sensors and smoke or fire detectors that improve home safety.

Another product category benefiting from the simplification trend is household appliances that are multifunctional. Electric cooking pots including a rice cooking function, washer-dryers or mini ovens with a steam or air-frying function recorded above-average growth rates in the first two months of 2022 and improved their market position enormously compared to the same period of the previous year.

As a GfK analysis underlines, people now working or studying from home have created a unique opportunity for tech and durables (T&D) companies to bring products to market that meet the demands of this remote/hybrid work culture.

According to GfK data, globally, 16% of companies are fully remote, approximately 62% of employees aged 22 to 65 say they currently work remotely at least occasionally, and 99% would choose to work remotely for the rest of their life, even if it was just part-time. The industries with the highest numbers of remote workers are healthcare 15%, technology (10%) and financial services (9%).

The remote working consumer will see seismic shifts over the next five to ten years. Experts predict that 73% of all global departments will have remote workers by 2028. And with global sales of T&D up 18.1% to 646 billions between January and September 2021 (compared to the same period in 2020), the rising demand for home office equipment provides a strong opportunity for T&D brands.

Virtual reality (VR) has a part to play too and GfK data shows that 22.5% of global consumers plan to buy a standalone VR headset ‘in the next year or two, suggesting that this way of working could soon become a reality. As demand increases and more suppliers enter the VR space, manufacturing costs will drop. In turn, we will see more applications appearing as brands latch onto the trend. 61% of consumers say they prefer retailers with augmented reality (AR) experiences.

According to GfK data, the technical consumer goods sector saw a revenue growth of 17 percent to 726 billion US-dollars by October 2021, while unit sales increased by just 3 percent. The driving segment of the year was wearables, which increased its revenue by almost half compared to the same period of the previous year, with a growth of 44 percent.

«The increase in revenue for the year as a whole is due to the strong start – commented Jan Lorbach, GfK expert on technical consumer goods -. While the first few months of the year saw increased demand and thus immense growth, revenue steadily leveled off over the course of the year, hovering around 2020 levels and even below in some cases.»

«The decline in overall demand in the market for technical consumer goods during the year is primarily attributable to product groups with high household penetration, which at the same time have limited potential to grow further. Televisions, for example, recorded an 11 percent drop in sales compared with the same period of the previous year, from January to October. Despite weak demand, revenue in US-dollars for this product group remain at slightly positive levels, with televisions up by around 11 percent. This means that fewer pieces were purchased overall, but at a higher price point. On the one hand, this was due to price increases caused by supply chain interruptions and chip shortages, but also to the steadily growing trend toward premiumization. According to this, consumers were opting for larger, faster or better-equipped devices when making new purchases and are thus spending more money per purchase on average».

Last year, Black Friday took place for the first time influenced by the pandemic and, according to GfK data, sales were made for 53 percent on the online channel, surpassing brick-and-mortar purchases for the first time ever. In 2021, both consumers and retailers needed to refocus, but despite numerous obstacles to this year’s shopping season, GfK is forecasting a positive bottom line overall for the Technical Consumer Goods market in 2021.

«After a turbulent 2020 – GfK experts commented – the global economy is on its way back to pre-pandemic levels. Nevertheless, this will not be reflected one-to-one in sales because technical consumer goods are once again competing with sectors such as travel or fashion this year. This is compounded by the current instability of supply chains and the resulting unusual price developments that are passed on to the end consumer».

Regarding home appliances, that throughout the pandemic saw a great growth, for 2021 a particularly high demand is expected for appliances with increasing market penetration, such as fully automatic espresso machines with +33 percent or food processors with +4 percent from January to September 2021.

«Consumers already had high demand for luxury technical products to enhance their home environment during the 2020 lockdown. As a GfK study confirms, sales of big screen TVs (70+ inch) increased by 64 percent from January to September 2021, while those of smaller TVs stagnated. Smart home appliances are also expected to increase. Black Friday and other shopping events could be highly incentivizing consumers as they remain willing to invest in their own homes, but with promotions on premium products, they can consider saving money in absolute terms» – Gfk experts added.