Everything that goes up must come down. While staying at home, most consumers who invested in their properties have already bought the latest in TVs, speakers and smart home tech. Rising interest rates are diminishing the spending power of these same consumers. However, experts are pointing to more optimistic signs that this holiday season will not fail consumer tech retail sales; the bubble is not bursting quite yet.
“Consumers are taking a recessionary posture,” said Ben Arnold, executive director, industry analyst of consumer technology at Circana. “Meaning that people are not officially in a recession, but they are pulling back spending.”
Here’s the bad news first: according to recent research released by Circana, the inflation in the market is improving, but there is still a likelihood for a recession later this year or in 2024. Student debt repayments are due to restart ahead of the holiday season, adding to consumers’ economic stress.
However, inflation is moderating every month that passes and, for the most part, retail inventories are coming down. This year there are 31 days between Thanksgiving and Christmas Day, which is the second greatest number of days in the traditional shopping window for the U.S. and will give more time for shoppers to spend. Because consumers will be buying more thoughtfully this year, it can also be expected that they will spread their purchases throughout the holiday spending period.
Consumer technology is still a healthy market to be in. The Consumer Technology Association (CTA) reported earlier this year that U.S. technology retail revenues will fall to $485 billion in 2023, down $12 billion from 2022 and $27 billion from the 2021 peak of $512 billion, although this still exceeds 2019’s $435 billion revenue. So while this year won’t continue the boom seen during the pandemic, it will see positive numbers in some sectors.
Projected to release this September as usual, the new iPhone 15 is expected to have a similar design to the iPhone 14 (shown here) but with one major update: a USB-C port. It is also predicted to have a two-button design for the volume controllers and an identical camera module for its triple rear camera sensor and LED Flash. The MSRP at the time of print is currently unknown.
As one of the newest folding phones, Google Pixel Fold has a smartphone silhouette that fits in the palm of a hand, but flipped open it boasts a 7.6-in. screen with a thin profile. Google’s custom-built hinge not only contributes to that thinness but also doubles as a durable hinge. Pixel Fold has an IPX8 rating for water resistance. Price starts at $1,799.
Amazon’s Echo Show 5 combines the Alexa voice assistant with a compact screen, enabling consumers to check their video doorbell, view lists, make video calls or watch online clips. This newest iteration is 20 percent faster than its predecessor and boasts a speaker system that doubles the bass and delivers clearer sound. Echo Show 5 and Echo Pop both support Matter. Price starts at $89.99.
The Garmin Fenix 7 Pro Series is a premium multisport GPS smartwatch with solar charging, designed for athletes and adventurers of all types. The watch includes features such as pro-grade performance insights, mapping capabilities, health and wellness tracking, and a built-in LED flashlight solar charging lens. This will add up to 37 days of battery life in smartwatch mode and up to 139 days in expedition mode. Pricing starts at $899.99.
The Meta Quest 3, set to launch later this year, is a next-generation virtual and mixed reality wireless headset that will feature higher resolution, breakthrough Meta Reality technology, stronger performance and a more comfortable form. This will be the first headset to feature a next-generation Snapdragon chipset developed in collaboration with Qualcomm Technologies. The 128GB headset will come with the option of additional storage and will have a starting price of $499.99.
“Black Friday is not the phenomenon it used to be,” said John Harmon, managing director of technology research at Coresight Research. “There are other shopping holidays competing for consumers’ dollars, like Amazon Prime Day and Cyber Monday.”
Coresight projects a low, single digit total of nominal retail sales growth in the final quarter of 2023. This is because consumers are feeling positive despite the current challenges; 34.2 percent of surveyed U.S. consumers expect their personal financial situation to be better in the 2023 holiday season than it was in the 2022 holiday season. In all, growth has been softly swinging between mildly negative and mildly positive, and that behavior is expected to continue.
How to Take Advantage of the Current Market
“We’re in a period now where we’re seeing a fairly significant level of promotions in consumer electronics. This hasn’t done very much to kickstart demand,” said Arnold, adding that this is reflective of consumers’ recessionary posture. “I think manufacturers and retailers are all going to be competing for what’s looking like a smaller kind of pool of electronic spending.”
There are some consumer tech items in particular that will sell well this Black Friday. Circana reports that the best performing categories for consumer tech will be item trackers, drone accessories and instant photo printers, while the worst will range from in-dash stereo receivers to smart displays. TVs always do well on Black Friday; 70-in. 4K TVs are poised to be big sellers in particular. Smartphones, particularly the newest iteration of the iPhone, is also huge. Foldables might also show some growth this year.
“Foldables are the state of the art in displays right now,” added Harmon. “They are still very expensive and function like small tablets.”
Big-ticket smart home products are not necessarily something that consumers go for on Black Friday, but smaller, AI-driven products such as Alexa or Google Home often end up in carts. Security devices and DIY smart home products like smart lighting are also popular. Consumer knowledge around Matter is growing, and good marketing around products conforming to this standard might drive up the demand.
“If retailers get people to pay attention to the smart home category this holiday, it will all seem to line up nicely from a timing perspective,” said Arnold. “So even though we don’t see a lot of sales, it generally will still be a good time to message and talk to people that are in the market for those products.”