By Stephen Silver
For the consumer tech industry, this year’s holiday season is being approached much the same as the past three years: With a great deal of uncertainty.
While the supply chain crisis of recent years has largely dissipated, inflation has begun to taper off as well, and economists are seeing a full-on recession as less likely. However, in the consumer tech space specifically, a lot of customers completed their big ticket shopping during the pandemic.
The major industry forecasts for the holidays have not yet been released, with the National Retail Federation and the Consumer Technology Association usually publishing their forecasts later in the year. But Dealerscope took an early look at where things stand for consumer tech this holiday season.
The Big Picture
“It’s been a challenging year so far, and I don’t think there’s a lot that’s going to change by the holiday season,” Paul Gagnon, Vice President and Industry Advisor, Consumer Technology for Circana (formerly NPD Group) told Dealerscope in an interview. “Consumers have really shifted their spending towards things that are outside of the home.”
Consumers spent a lot on things for their homes during the pandemic, from TVs to computers to video conferencing setups. Since then consumers have begun shifting their spending towards experiential activities such as travel. “A lot of consumer electronics products are purchased in cycles that are longer… if there was a big surge in spending during the pandemic, there’s going to be a little bit of a slowdown afterward.”
And while Circana has not yet released official numbers to its clients, “we’re expecting, at this point… very mild growth potential, and largely that’s because spending on tech products during this last holiday season was pretty poor. So the comparison period is favorable,” Gagnon said.
As for the National Retail Federation, it has not yet released a forecast. But its economists predicted, in the June 6 edition of its Monthly Economic Review that was provided to Dealerscope, that the economy is more likely to land in a “soft landing” than a recession.
“Today’s economy is a lot like looking into a kaleidoscope, with the view changing and the data providing a different reflection of what’s happening every time you look,” National Retail Federation Chief Economist Jack Kleinhenz said in that forecast.
“Depending on which data you view in the economic kaleidoscope, you get two different angles on the state of the consumer. While survey data shows consumers do not have much confidence in the economy, actual spending data shows they were upbeat as the second quarter kicked off.”
The Product Outlook
“Typically, the leading products in a normal holiday season are related to either TVs — TVs are a very popular item in the holiday season, and they often lead the Black Friday promotions — and PCs, computers,” Gagnon said. He added that the TV category has seen “mild growth” of late, and that might translate to the same thing once the holidays arrive.
“I think that what consumers are likely going to do is look for the best deals on these products, and that’s likely to be found this holiday season,” Gagnon added, of customers likely to hold off on purchases until the time comes for Black Friday and other holiday offers.
He also said that computer sales might not be as strong as in a typical holiday season, since PC sales surged so much during the pandemic that “the lifecycle isn’t ready for a refresh just yet.”
According to Gartner figures released in April, global PC sales plunged 30 percent in the first quarter of 2023, which the research firm attributed to oversupply and low demand.
Gagnon named headphones, gaming products, and tablets as products more likely to perform well this holiday season.
All in the Timing
Is holiday shopping likely to get underway early this year? Holiday sales were moved forward into the fall during the pandemic era, but things mostly started selling in October in 2022, and Gagnon expects that to repeat this year.
“People are more comfortable going into stores, and shopping on the day of the sale is feasible now, when it wasn’t feasible during the pandemic,” Gagnon said.
Another factor? If Amazon once again holds a second Prime day in October, that could inspire other retailers to follow suit with early sales.
Whither the Metaverse?
Gagnon said that sales of AR/VR products have been “pretty weak” the last couple of years, following big performance in the holiday quarter of 2021 after the release of the Meta Quest 2. Sales slowed down when the prices were raised for that product, and nothing else in the category has broken through.
The Meta Quest 3, announced in early June, is on the way from the company formerly known as Facebook, with an announced release in the fall at a starting price of $499.99.
However, not among the big holiday products this year will be Apple’s Vision Pro Headset, which was unveiled June 5 at Apple’s World Wide Developers Conference. That product, with a price tag of $3,499, isn’t scheduled to hit the market until early in 2024. And even then, its high price point makes huge sales unlikely right out of the gate.
Talk of the metaverse, both as a feature of products and as an e-commerce platform of its own, was all over the place in 2021 and 2022, dominating the discussion at tech conferences. But more recently, it has looked like the metaverse hadn’t been catching on with the general public. As noticed by Insider, the word “metaverse” was not mentioned a single time in Apple’s WWDC keynote.
“Some of the companies that have been talking about developing for a “metaverse,’ whoever operates and runs that metaverse, may have backed off a little bit,” Gagnon said. “But certainly, from a consumer standpoint, and sales of AR/VR products are down quite a bit, and maybe that’s related to the fact that the interest or the use case for VR products was pretty centered on things like games in VR, and the people who were interested in that bought those devices back during the pandemic.”
“Bang for the Buck”
There are other things to consider heading into the holidays.
“There are a lot of factors that consumers are facing, like rising credit card usage, higher interest rates on credit cards, possibly the resumption of studio loan re-payments by September or October time frame, that are all going to be on the mind of many consumers,” Gagnon said. “And we have seen a pivot in most CE categories towards more value-priced products. So I think that’s going to be an important trend for the holiday season, where consumers really are seeking out value-priced, bang-for-the-buck so-to-speak categories within each of these categories.”