Home CE Retail International Perspectives: Europe vs. U.S. – Key Market Trends  

International Perspectives: Europe vs. U.S. – Key Market Trends  

International Perspectives: Europe vs. U.S. – Key Market Trends

How are the two biggest markets for technical consumer goods performing as we enter 2023, and what are the key differences between them. Let’s take a closer look at factors influencing sales over the past year, and how the market should trend through 2023.  

GfK’s latest data indicates a turndown in technical consumer goods of 8 percent (in U.S. dollars) for the period January through November 2022 for the global market not including the USA – still 11 percent above the 2019 figure.  

In Europe, the market was down in volume demand (units) 2022 by between 6 percent and 7 percent, with a reduction in purchasing power, high energy prices and a weak Euro compounding the “post-Covid” effect. Two countries in the EU went against the trend – with the strongest player being… wait for it… Poland – with a mid-single digit growth in 2022. 

Why? According to GfK expert for the Global Consumer Technology and Durables market Norbert Herzog, “On the one hand, it’s the progress Poland has made in terms of digitization, in terms of people purchasing more IT gear, especially telecom equipment. Poland is leading growth in telecom and smartphones. On the other hand, extra impact is coming from the influx of Ukrainian refugees. If you think about yourself being a refugee, what would you need? You’d need a smartphone, and you would potentially need some equipment to work from your new place of residence.” 

The other unexpected growth zone is Croatia. This, according to Herzog, is due to the introduction of the Euro in that country. He says the result has been that a large percentage of the population who is expecting rising prices once the Euro is there. There have also been strong investments in real estate and tourism, sometimes with the help of local currency cash that had to be spent. Herzog says demand in Europe in 2023 in terms of volume will remain below pre-pandemic figures, and even slightly lower than 2022, with volumes finally picking back up in 2024. 

Meanwhile the Consumer Technology Association projects U.S. tech retail revenues of U.S. $485 billion in 2023 – slightly above pre-pandemic levels. While the association anticipates a looming recession and inflation will weigh against consumer spending in the coming year, consumer technology industry revenues will remain roughly U.S. $50 billion above pre-pandemic levels.  

Steve Koenig, VP Research at CTA, explains that while not being hit to the same extent as Europe, the U.S. is viewing the effects of inflation as it eats into the consumer tech wallet:  

“Where consumers are pulling back most is, you guessed it, in hardware and hardware upgrades. Where they are less willing to pull back is on services spending. According to our update, 31 cents of every tech dollar spent in the U.S. is attributable to services. Pre-pandemic, it was around 22-24 cents. We expect that trend to continue.” 

Strong Dollar Changes Global Dynamic  

Omdia Research Director Paul Gray says the two biggest factors creating a gap between the U.S. and European markets are energy and currency fluctuations: “A lot of CE prices are actually lower in Europe than they are in the U.S. at the moment, which is unheard of. It’s the result of a 10-15 percent devaluation of the euro against the dollar in the past year. As a result, everyone in Europe is curling up like hedgehogs, wondering what on earth they’re going to do about raising prices, whereas in North America, you’re buying your components in dollars and selling in dollars, so that makes it a pretty attractive place to do business at the moment. That’s a huge difference.  

“Suddenly, the whole business viewpoint has changed from the old one which had served since the 1970s, of ‘Try out the product in your home market. When you’ve worked out what the successful formula is, you use North America to take you to high volumes and drive economies of scale, and then after that, you go to Western Europe and actually make some money’. And that’s not the case now. It’s ‘Go to North America and make money’. And for Western Europe, ‘Hmmmm, we’ll try to sort that one out when we get to it’. That is a really profound change that will probably be with us for another couple of years, until the whole thing flushes through and tidies itself up again.” 

Europe’s Energy Squeeze 

The huge hike in Europe’s energy prices due to the war in Ukraine is not only affecting inflation; it also means European consumers are becoming fanatical about energy efficiency in new devices.  

“In Europe, you can make a very good case of how you can save people money and look at cost of ownership, and people get that,” said Paul Gray. “In North America, energy is cheap, so it’s not high up the agenda for ordinary consumers. That sudden tipping in the landscape has made a really big difference in that the global brands that have taken sustainability seriously now find themselves at a major advantage compared to those that haven’t made a deep investment in those technologies.  

“Consequently, there will be a growing gap between North American and European markets, as the European ones face up to the consequences of people’s electricity prices doubling and develop products that can deal with that. Heat pumps in major laundry and kitchen appliances are an example, as is heat recovery, and these features will be far less essential in North American models, so we will see a splitting off of features in the two markets.” 

Premium TV performance 

According to Futuresource, consumers in the USA remain the biggest buyers of large TVs, with 50-inch or larger TVs comprising of over half TV sales in 2022, compared to just over a third of TV sales in Western Europe. US consumers are also the first to buy into new premium TV features, leading in adoption of technologies such as OLED, 4K and 8K. 

The shift to larger screens is expected to slow in 2023 as consumers feel the brunt of economic pressure.  

Meanwhile, in both Europe and the USA, TV brands are now able to make more money out of advertising technology and data than they are out of products, with a smart TV serving-up advertising as soon as it is switched it on, with data relayed back to the broadcaster, helping with viewership figures.  

“In North America, this market is far less regulated than in Europe, so you can make more money in North America,” said Omdia’s Paul Gray. “There is a really big new battle emerging between these companies, and as there are certain things you can’t do in Europe, there will be much less money to be made there. For example, in the US, in the last quarter, Vizio made 99 percent of its profits out of data and advertising services rather than hardware. We reckon that Samsung makes around $1bn out of its Tizen platform on TV for advertising services and so on. This is really big and really serious. The next stage is probably going to be revenue sharing between the TV brand, the platform, and maybe even the retailer.”  

Audio segment set for healthy growth  

According to analysts Statista, strong growth is expected in the speaker segment in both the US and Europe, with 5.65 percent CAGR 2023-2027 value forecast for Europe and 7.49 percent for the US market. CAGR volume growth forecast for Europe is 7 percent vs 9 percent for the US market. Strengthening smart speaker sales are driving this growth.  

Headphone sales are set to rise in both markets by between 1.8 percent and 2.1 percent CAGR volume-wise. In Europe, the market value is forecast by Statista to grow annually by 2.20 percent CAGR 2023-2027. The U.S. market is expected to grow annually by 1.21 percent CAGR 2023-2027. 

Home appliances  

The biggest difference between the markets is, and remains, the typical size of appliances. “In built in we talk about ranges and 30-inch appliances in the U.S. where 60 cm is the European standard,” said Dr Reinhard Zinkann, executive director and co-proprietor at Miele, who added, “The second biggest one is the retail footprint. The U.S. is very much characterized by big national accounts. However, large regional chains and specialty appliance retailers still have a significant market share in the US, especially when it comes to the high-end brands.” 

According to Miele, while built-in is very popular in Europe, it is now becoming increasingly popular in the US. European size appliances are becoming more relevant in the U.S., especially in the project world where condominium sizes are becoming smaller and smaller. 

The year ahead  

Much will depend on how the conflict in Europe pans-out over the coming year, and how inflation is brought under control globally. Already it appears that feared gas and fuel shortages in Europe have not been as damaging as originally feared. Premium brands and products will continue to lead the way in both markets.