As we round the corner and head into the third holiday season of the COVID-19 era, many of the same questions continue to linger. Primarily: how will the pandemic shape consumer spending and, perhaps more crucially, how will supply chain issues affect that spending? These familiar questions haven’t gone away, certainly, but there’s a sense that we’ve all become more used to them — as manufacturers, retailers and consumers — and that we’re on firmer footing, with a few years of dealing with these challenges during the holidays under our collective belts.
Of course, as we look ahead to the year’s holiday shopping seasons, it’s always instructive to look back. Despite the concerns about supply chains, there were above-average sales during the holiday 2021 buying period, with bellwethers like Apple seeing record-breaking iPhone sales and strong sales of Macs and AirPods as well, while smart TVs, game consoles, smart home and home audio products all continued to perform.
“There was plenty of discussion about getting out to the stores early because of concerns about inventory, but in the end, during last year’s holiday season there was a decent level of product availability, in general,” said NPD consumer technology industry analyst Ben Arnold. Indeed, according to the National Retail Federation (NRF), electronics and appliance stores saw a 13.8 percent increase in sales; indeed, according to Insider Intelligence, the 2021 holiday season in fact represented the fastest overall retail year-on-year growth in more than 20 years, thanks largely to accelerating wage growth, the lasting effects of government stimulus checks, and a strong stock market.
Will This Year Be Another Hit for Tech?
NPD’s Arnold expects another big holiday for technology spending in 2022. He points out that for electronics, holidays are typically about the same product categories, by and large: TVs, headphones, game consoles — as well as Apple, which is usually its own story during the holidays. Arnold points out that 2020 and 2021 were massive years for technology sales, and that what he’s seeing so far this year indicates that technology sales are a little slower. This holiday, he believes we’ll see strong sales in televisions — especially with screens 70-in. and above, and those using advanced screen technologies.
“We’re seeing OLED performing really strongly and gaining awareness and coming to more screen sizes, and I think there’s a trend around premium, emerging segments in tech,” said Arnold.
While there was a lot of volume selling in the last two years in terms of mid-market products — 55-in. LCD TVs and the like — he wouldn’t be surprised to see a spike in the sales of more upmarket goods like those big, living room centerpiece OLED sets. Ultimately, sales of video and home theater products have been elevated over the last two holiday seasons, and Arnold says he’d be surprised to see that change in 2022.
“Something I’ve been hearing is that the supply on [TV] panels has really ramped up, which means that we could see more inventory and some steeper promotions this holiday, compared to last holiday,” he said, adding that this will likely be a more “promotional” holiday than last year in the consumer electronics space. “The rates of pricing growth throughout the year, to me means that consumers will be a little more focused on the holiday; if I’m interested in buying a TV but in September it’s a bit out of my reach in terms of price, I’ll wait until the holidays to see if that 70-in. TV goes down in price. And I think that’s sort of hardwired into a lot of consumers.”
Indeed, while supply issues remain a massive challenge, companies are also rapidly adapting. We’re seeing tech companies having to be more creative — in terms of using components sourced from various different manufacturers, and sometimes actually even using slightly different components. In an extreme example, Wired details how “one large industrial conglomerate had resorted to buying washing machines just to scavenge the chips inside them for its products. Of course, the consumer electronics space is necessarily more practical.”
“This might mean certain product SKUs have multiple slight manufacturing variations, replacing a resistor here or a capacitor there with one that performs similarly, but which ultimately combine to make a product that functions identically across all of these minor variations,” said Arnold. “I believe that at the end of the day, especially with the big tech companies, we’ll see the inventory on the products we want this holiday.”
As far as emerging trends, it’s safe to expect a continuation of what we’ve seen in recent years, particularly as it relates to the pandemic. “One thing we’re seeing [at NPD] is that consumers are more focused on health and wellness than they have been historically, and with that in mind, Apple Watches and other fitness trackers have performed decently, and I’d expect that to continue — especially with some new Google smartwatches potentially coming to market,” said Arnold. He points out that virtual reality had a stellar holiday in 2021, and that recent news about new headsets potentially coming to market could drive up interest for holiday VR sales in 2022. While gaming wasn’t as big during 2021’s holiday season as it was in 2020 — the real pandemic gaming surge year — he expects it will have another strong holiday season, should there be enough supply of the game consoles, which in recent years have struggled to keep up with demand.
While trend forecasting can be tricky business, and likely depends on how things pan out over the next few months, it’s worth remembering that we’re still in the collective consciousness of the pandemic era. If infection and hospitalization numbers continue to move in a positive direction, Arnold points to a possible lift in sales of things like home security cameras and other home security accessories, as people potentially make plans to do more traveling and spend more time outside the house than they have in recent years.
“We’ve spent a lot of time buying gadgets, but what are the products that add more value to our lives?” said Arnold. “I think that will be one of the trends we see at the holidays.”