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Each winter, POTUS addresses a joint session of the US Congress, declaring that the State of the Union Address is powerful. Then next he spends just over an hour listing how the regime deals with a series of problems that the country constantly faces.
In the face of rampant inflation, supply chain slowdowns, Covid-related Chinese factory shutdowns, labor shortages, increased e-commerce intrusion into brick-and-mortar stores, and a variety of other slowdowns in consumer technology Industry stakeholders tend to need to be. A little more realistic.
“Most business leaders are inherently optimistic, but I prefer to deal with possibilities,” CTA President and CEO Gary Shapiro pessimistically wrote in a recent article, “Prepare For the Recession.” says.
As in any situation, some businesses cope better with volatile business conditions than others, wanting and interpreting a picture of the sun on the horizon as rising rather than setting. is needed. “What we see in the industry today is that there can always be ups and downs, depending on the particular market segment,” said Samsung’s American Home senior vice president of his entertainment division. philosophically stated James Fishler. It looks strong and is growing when compared to pre-pandemic levels. ”
“Looking at the industry landscape, we’re starting to see growth returning to pre-pandemic levels in various consumer technology categories and products,” agrees Tyler Ishida, president of Sony Electronics’ Consumer Business Group. and advise as follows: Not all categories are created equal, so the market outlook is highly dependent on the products and categories we focus on. ”
“Overall, the CE industry is rapidly returning to pre-pandemic trends,” said Andrew Sivori, head of go-to-market strategy for LG USA’s home entertainment division. “However, we are struggling to exit the stimulus ‘sugar high’ we have experienced over the past two years. But as it has for decades, it continues to adapt to ever-changing consumer expectations and behaviors. ”
However, TCL’s new senior vice president, Chris Hamdorf, isn’t as optimistic as his big-man compatriots. “The industry is declining year after year as consumers choose to spend their money on travel and experiences rather than on household items like TVs.”
it’s always getting better
The optimism of major manufacturers appears to be fueled by the consumer tech industry’s historical resilience to recession. “In general, NPD believes technology is still in a very strong position compared to some of the challenges across the economy,” said NPD Group Vice President and Industry Advisor for Technology and Mobile. , Stephen Baker reports. “The first half of 2022 is clearly going to be very difficult because comparisons to the stimulus-driven growth in the first half of 2021 are very difficult. No one downplays the challenges of growing against the US, but the outlook for when the market starts to shake off those hangovers looks very good.Even now, looking at the current results, most We see major categories delivering volume at, and in some cases even exceeding, 2019 levels, which clearly bodes well for long-term growth in consumer hardware.”
Particularly resilient to the ups and downs of recession and inflation are the more premium markets, such as video and audio products sold by independent dealers, the traditional heart of the CE business. “Industry conditions continue to be strong within independent channels,” argues Lee McDonald, vice president of consumer electronics for the Nationwide Marketing Group. “We have seen a major vendor and his partners increase production and inventory beyond his 2021 levels … e-commerce continues to perform well, but strong new product and technology We’re seeing a marked return to in-person shopping, fueled by the ‘tok’ cycle. Foreword. “
top problem
So what are the biggest obstacles to a return to some degree of normalcy for the consumer tech business? The consensus seems to be continued supply chain problems and the looming threat of inflation/recession.
Supply chain issues confuse both manufacturers and retailers. “2020 and 2021 have seen some cascading collapses in global supply chains, but the rest of 2022, and he into 2023, will definitely need to be addressed. said Nationwide’s McDonald’s. “Although inventory levels have improved in core categories such as televisions and projectors, we still see significant shortfalls in secondary and tertiary categories such as audio, automation and other component lines.”
Even if Chinese factories return to pre-pandemic production, even if parts shortages are resolved, and distribution and delivery backlogs are overcome, will consumers still be able to buy tech products, or The question of wanting to buy looms, if not yet. , is casting a shadow over the industry.
“According to CTA Research, 68% of Americans believe inflation is the most important issue facing them and their families,” says Rick Kowalski, CTA’s director of industry analysis and business intelligence. is warning you. “Inflation weighs heavily on every consumer purchasing decision, and many have less disposable income than they have in the last two years. This could put downward pressure on consumer technology revenues. there is.”
But just as consumer tech usually suffers less than other businesses during tough times, the industry believes it can actually help bring back the good.
“The technology industry can play a leading role in reducing inflationary pressures,” argues Kowalski. “Technology companies are looking for short-term solutions, such as implementing digital transformation to improve competitiveness, redesigning products to reduce component costs, or combat rising freight and transportation costs. In the long term, billions of dollars are being invested in chip production around the world, but it will take time to mitigate the current problems.”
winner and loser
So which product categories are hot and not hot right now? It’s clear that the rise in work-from-home sales for PCs and tablets due to the novel coronavirus has calmed down dramatically, with Samsung and Apple Both have cut production forecasts, so smartphone sales are expected to fall by more than about 3% this year.
More stable are the ever-popular home entertainment products, especially big-screen TVs for viewing and action. “Consumer interest in displays that gracefully blend into living rooms was already high before COVID, but the pandemic has certainly accelerated that growth and we haven’t seen a decline in interest since.” He’s Samsung, says Fishler. It is in high demand across audience segments. ”
But as always, the current state of the industry is fueled by expectations for what’s next. “We feel like we are in transition to the next wave of innovation, where AI and augmented reality/metaverse in particular are starting to have a stronger impact on both mature and emerging categories. Principal Analyst at Reticle Research. “The former are everywhere today, but under the hood they’re improving tasks like video capture and upscaling. I don’t think this year will have much of an impact on the XR front in terms of new consumer offerings. But next year should bring exciting progress.”
Overall, “the CE industry is proving to be nothing without resilience,” summarizes LG’s Sivori. “In many ways, we are better prepared to weather this storm than we have been in years past. From improved discipline in PSI operations to the evolution of our digital marketing strategy, end to end, both manufacturers and retailers are We are much more efficient at maximizing sales opportunities.”
See: Holiday 2022 Insights
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