The Holiday “selling season” is rapidly approaching, as is the new year of 2020. While we all hope for clear skies when looking forward, there are currently some dark clouds on the horizon. The Consumer Technology Association (CTA) just forecast a flat holiday season with sales down slightly. The predicted figure for just the holiday is about $97 Billion in sales, which is still a lot of tech.
Technology goods continue to be among the top overall sales categories for holiday 2029, behind only clothing and toys. Analysts predict that overall holiday sales will grow for retail sellers by more than 3%, a healthy amount. We can all agree that recent findings of improved consumer sentiment are also good news, especially as consumer spending counts for two thirds of our economy.
However, like our technology sales outlook. there are clear signs of concern in the economy. Housing is slowing as is manufacturing, and while unemployment is almost historically low, wage growth is not terrific. This means the average consumer is still spending challenged and the Holiday is one of the few points of the year they open their wallets for more than necessities.
For technology goods, we are at the end of a cycle that has been the driver for some time. Smartphones, the most ubiquitous item tech has ever produced are now flat to down in sales. Global sales of smartphones will drop 2-3% for the year and no near-term recovery is expected in 2020.
Television is also saturated, with units down in the low single digits. In the US this has been characterized by a drop of about 6% in units, despite screen size and cost per feature price compression. This is especially seen in small sets as people use their phones as the TV.
Computer sales are also flat to down, with desktop sales down by more than 5% and laptop sales off by 2-3% in units. This is due to household saturation, longer replacement cycles (affecting smartphones too), as well as many leveraging smartphone utility as a laptop replacement.
The game business is also off. This is, in part, due to current console cycle. Overall game software, accessory and console sales now trail last year with no expected recovery until the next new console cycle begins. Considering that gaming itself is a huge category, overall bigger than movies and music combined, this too is a strong factor when considering overall growth.
Why do I mention these categories? It is because they represent more than half of all tech sales. When they stagnate, it requires either a recovery in them, or a new segment to emerge and grow enough to take their place. Some of this is happening with things like wireless headphones/headsets, smartwatches and wearables, smart home devices and other new goods. Unfortunately, none of these segments are yet large enough to start forward motion again though they also represent opportunity.
I do not foresee significant change to current trends in 2020. While things like 5G phones are exciting, it will take years for the network buildouts required for most consumers to benefit. Translation, we do not expect much acceleration from the feature even though 5G phones should be popular, and provide step-up feature for replacement cycle consumers.
For television, we also see no near term reacceleration of unit sales. Yes, we are now seeing NextGenTV or ATSC3.0, 8K sets and MicroLED displays but all of these are niche items for the moment. The key element is size as large screens, those above 60 inches are selling much better. Smart retailers are shifting to ever larger screen sizes to entice consumers to upgrade and replace.
While better screens and two-in-one laptop sales are up, the replacement cycle for laptops is also getting longer. iPad sales are strong, but do you sell Apple, or higher end laptops?
The game consoles will be refreshed next year with Playstation 5 and a new XBox on offer along with new games and accessories, but this event is about a year off at this point and we will see weak and down sales trends until then. Even so, are you leveraging growth in wireless headsets and other subcategories to grow sales in gaming goods?
As you can see there are winners here among the share losers and decliners. The question then is what vertical you serve and what end consumers. If you sell smart home devices, the outlook is bright as consumer intent to automate, secure, protect and enhance their homes is strong. Likewise with those consumers who are spreading smarts in their personal environment with wearables. Do you cater to those people? Do you sell the goods and services these items attach to?
Thematically, there is a lot of opportunity out there. Even with no growth, the overall market is huge, so the question is what part of it you serve, and whom. Those positioned already to the end consumers are already benefitting, so now is time to assess your own situation and see if you are riding on growth categories or determine if you can get on board. In a flat market when someone wins share it means other lose it, so do not sit back and let the market determine your fate. Instead look at the large opportunities and decide which ones you can pursue. If you are not sure or need some insight or advice we will be happy to talk with you.
Go out and get your share, serve your customers and develop new ones. All the best for the holidays and the new year to come.
If you’d like to know more, give us a call, or click here https://bluesalve.com/contact-us/ to schedule a free half hour call to discuss technology trends, or anything else affecting your business.
Robert Heiblim has more than 35 years of experience in the consumer electronics field encompassing all phases of general management, including management of new technology start-ups, and high growth companies. Along with his teams Mr. Heiblim has developed, marketed and sold hundreds of millions of devices through most global outlets for consumer technology. Robert is the current Chair of the Consumer Technology Association (CTA) Small Business Council as well as ex-officio Chair of the CTA Audio Board.
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