2023 in consumer electronics (CE) ought to be dubbed “the year of the great reset.” So far, we have dodged predictions of an impending recession and seen inflation recover to a more manageable 3.7 percent, down from the 50-year high displayed in 2022. At the same time, retail has been especially hard hit by layoffs in 2023 as companies tighten belts and reset from post-pandemic hiring frenzies.
Combined with these resets are major advancements in artificial intelligence and sustainability consciousness among consumers. These broad horizontal developments are set to have large impacts on all consumer tech verticals ranging from wearables to TVs. So, without further delay, here are the 5 best, worst, and slightly ambiguous trends that impacted the CE market in 2023.
Best CE Trends
The AI Revolution
Artificial Intelligence took a major leap forward in 2023 thanks in large part to the emergence of generative AI, a tool that allows users to generate new material using a series of prompts.
While it is a stretch to say that generative AI put the category on the map, it did worm its way to the forefront of popular culture in a way that would have been hard to predict in 2022. According to CNN Business, venture capital firms invested $15.2 billion into generative AI companies in the first six months of 2023 more than tripling the $5 billion invested throughout the whole of 2022.
Obvious applications of generative AI in the retail setting include virtual shopping assistants, and customer service chatbots that cater to individual needs of the customer. Amazon is even using generative AI to consolidate thousands of customer product reviews into a single, easy-to-process highlight section.
But, generative AI is just the tip of the iceberg for the use cases of AI in retail. Artificial intelligence via tools such as machine learning also can help with processes like demand forecasting, inventory management, customer sentiment analysis, and cashierless technology.
At the moment, AI in the retail sector is valued at $7.3 billion, according to an August report from Reportlinker.com, and is expected to reach $29.45 billion by 2028. Moreover, 48 percent of companies are already using AI to effectively analyze big data according to GITEX Global.
AI has certainly been one of the biggest winners in 2023. And while automation should make processes faster and cheaper for many businesses it is likely to come at the cost of human jobs. In May, IBM CEO Arvind Krishna announced that the company expects nearly 30 percent of non-customer-facing roles, as much as 7,800 roles, to be replaced by AI in the next five years.
Sustainability Consciousness Grows Among Consumers
E-waste is perhaps the worst-kept secret in the consumer electronics space. In 2022, consumers discarded 60 million tons of electronics globally, the equivalent of 1,000 laptops every second for a year.
The good news is that 2023 has been a breakthrough year regarding consumer attitudes towards sustainable products. According to research conducted by Adecco, online searches for sustainable goods increased 71 percent in 2023 and 50 percent of consumers are willing to pay more for green products.
The refurbished electronics market, valued at $48.29 billion, is set to be a large beneficiary of increased consumer consciousness. By 2030, the market for refurbished electronics is expected to grow to $94.1 billion.
This explosion in consumer interest in refurbished products goes hand in hand with “Right to Repair” legislation passed by the European Commission in March, which is likely to spur similar legislation in the U.S. A study conducted by the French Agency for Ecological Transition estimates that buying a refurbished smartphone over a new smartphone avoids the extraction of 180 pounds of raw materials and 51 pounds of greenhouse gas emissions on a yearly basis.
Trends Toeing the Line
Inflation Falls but Effects Linger
As of September 30, 2023, inflation in the U.S. is sitting at around 3.7 percent, down significantly from 8.2 percent in September 2022. This drop in inflation has gone a significant way towards calming fears that the market would enter a recessionary period in 2023.
While inflation has trended closer to the FED’s target rate of 2 percent, GDP growth is still far from the 5.8 percent growth rate displayed in 2021. In fact, GDP growth through the first 2 quarters of 2023 has only barely exceeded 2022’s 1.9 percent growth rate.
Despite only modest GDP growth in 2023, resilient consumer spending and modest GDP growth on the heels of one of the worst inflationary periods endured by the U.S. economy in 50 years, is a great sign that the market has stabilized in 2023.
However, the tumultuous state of the economy since the start of the COVID-19 pandemic is set to have a large impact on Gen Z. Research from Bloomberg suggests that consumers aged 16-24 have come to expect higher levels of inflation than their millennial counterparts, who came of age during a much more stable inflationary period.
Dayo Abinusawa, founder of London’s Awa Business School, elaborated on the dynamic in an interview with Fortune. “Gen Z will be left with psychological scars from persistent inflation due to increased uncertainty and anxiety,” he said. “Young people are typically affected by inflation, as they are most likely to work part-time, or in low-paid jobs.”
Worst Trends in CE
Target announced earlier this year that it is closing over nine outlets, including locations in New York City, Seattle, San Francisco, and Portland, due to rampant crime. The retail chain released a statement explaining the closures saying: “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance.”
In an earnings call in May, the company estimated that it would take a $500 million hit from crime in 2023. Target is far from the only retailer feeling the effects of retail crime. According to the 2023 National Retail Security Survey by the NRF, crime accounted for $112.1 billion in losses for the sector in 2022 with an average shrink rate, a figure quantifying loss, of 1.6 percent.
Most concerning for retailers, organized retail crime is not just becoming more prevalent but also more violent. According to the same NRF survey, 67 percent of respondents said they were seeing even more violence and aggression in tandem with retail crime.
After 52 years of operation, Bed, Bath & Beyond, one of the largest home goods retailers in the country, called it quits in 2023. The struggling brand officially filed for bankruptcy in April and in the process shuttered 896 stores across three brands. While the brand, whose intellectual property rights were purchased by Overstock for $21 million, has been reborn as an online-only retailer, it is but a shell of its former self.
With the closing of Bed, Bath & Beyond’s physical locations, layoffs are to be expected, however, as of yet, the specific amount of former Bed, Bath & Beyond employees out of work is unclear.
Bed, Bath & Beyond’s struggles are a microcosm of the economy at large. As of August 2023, the total number of layoffs affecting the U.S. economy has surpassed 550,000, amounting to the third-highest year-to-date figure since 2009. Out of the 550,000 layoffs affecting the nation, roughly 150,000 have come from the tech sector and 55,000 out of retail.
To put these figures in perspective, year-to-date layoffs in retail are up 524 percent in comparison to the same period (January through August) in 2022.
This spike in layoffs has come in large part due to brick-and-mortar closures, and companies looking to trim unnecessary costs in tight economic times. Andrew Challenger, labor expert and Senior Vice President of Challenger, Gray & Christmas, Inc., said in the company’s Challenger Report: “The job market is resetting after the pandemic and post-pandemic hiring frenzy.” He went on to say, “The increase in job cuts is not surprising as technological disruption and companies taking a cost-savings approach on the economy claim positions.”