At the first CES 2023 media day, Paul Gagnon, vice president, tech industry advisor, and Ben Arnold, executive director and tech industry advisor of the NPD Group, spoke on the impact of the past several revolutionary years on how today’s consumer spends – or doesn’t spend.
Consumers are more willing to pay higher prices.
Prices went up during the pandemic because of key component shortages, which made certain products more expensive. There were supply chain disruptions and rising costs for logistics and labor, as well as an energy price increase. There has been unprecedented demand, as well as unprecedented amounts of stimulus to fuel that growth. Now consumer price sensitivity has fallen, due to lowered inflation expectations. So prices are higher due to device-level increases. But despite prices per inch falling from the heights of 2021, things settling at a significant premium to pre-pandemic and units only down 6 percent from 2019.
Participating in Non-Traditional Shopping Events
Consumers say Black Friday has best holiday deals, but prime Day is a close second. 19 percent of consumers say they will stop shopping before November, meaning Prime Day, Deal Days, etc. The landscape of the products is being promoted during these key times. Though Black Friday and Cyber Monday drive the most promotional volume, Prime/Deal Week is efficient in driving units. We are not abandoning Black Friday as a promotional time, but consumers are looking for alternative solutions.
Demographic Shifts in Spending
At the beginning of the pandemic, lower income groups strongly increased tech spending, but only the highest income groups maintained their current spending. A lot of people were able to work from home. All of these income groups were down in spending in 2022, but most so far include the lowest income profiles. You do still see growth for these different income groups, which are better able to weather inflation. Ages 18-24 had the highest ASP spend for Notebook PC purchases, while ages 24-34 spent the most money YTD on TV purchases. 34-44 are the largest and fastest growing cohort of Notebook Gaming PC purchasers, and 45-54 are growing in Desktop Gaming PC purchases. Post-Pandemic Generations respond differently.
Technology Products are More Essential Part of Budget
Consumer technology revenue remained elevated this past year compared to 2019. 2023 revenue is expected to be $8 billion higher than 2019. Our forecast going forward does not predict a lower spending in 2022. We’re operating at about $8 billion dollars above 2019. It’s higher sales of tech, a larger industry as a result. Consumers have identified technology as a necessity. Spending on tech is as likely as other household essentials to be cut because of inflation. About 31 percent said they were cutting down on technology products, above home and beautify products. This compares very closely with household spending accessories.
Retail Shopping: More Online and More Social
Consumers want options. They want the option of purchasing online, which is going to make store footprints shrink, but more warehouse space. The e-commerce share of technology dollar spending has stayed steady in 2021 and 2022. In tech, e-commerce was supercharged as a channel during the pandemic, and online promotional events are still major drivers.