As high interest rates continue to weigh on the U.S. economy, all eyes have been glued to the almighty consumer discretionary spending reports (among others) to see just how the economy has been faring. Generally, if people are spending less on non-essential goods, the economy is slowing down, and according to a report by Circana, spending on consumer technology might be among that non-essential class of goods that’s slowing down.
According to the latest Future of Consumer Technology report from Circana, sales revenue for consumer technology products is forecast to decline by 2% in 2024. Despite this, however, Circana remains optimistic about growth in a few select categories.
“As we reach the midpoint of 2024, it’s clear that many of the economic pressures from late 2023 and early 2024 are still impacting consumer spending,” said Paul Gagnon, vice president and technology industry advisor, Circana.
“While unemployment remains low and real wage growth has been positive, high credit card debt and mortgage interest rates continue to strain consumer finances.”
Most consumer technology categories underperformed in the first quarter and continue to do so, according to Circana. Couple that with the anticipated rate cuts coming later this year being far less significant than originally anticipated, eroding consumer confidence and spending in the second half, and you have the current cautious outlook.
Lightapalooza took place in late February, and the growth of the event has mirrored the rapid ascension lighting fixtures and controls.
Of course, this simply reflects the near term for the remainder of 2024, with the longer-term outlook for 2025 and 2026, looking pretty good, according to Gagnon. Additionally, specific categories of consumer technology such as notebook PCs and large screen TVs are expected to see an increase in spending, despite the dour look on the rest of the segment.
In fact, demand for ultra-large screen size TVs has exceeded expectations from Circana. And that’s not accounting for the likely surge in demand that usually comes around the holiday season. As a whole, Circana projects positive growth for TVs over the next two years.
Tablets have also seen a notable boost in sales numbers in late May leading into June. The introduction of a new generation of products with upgraded capabilities seems to have resulted in consumer refresh activity and spending stemming from innovation.
“Introducing significantly innovative products that offer enhanced productivity, performance, and convenience will drive consumer interest and upgrades,” notes Gagnon
“Emphasizing affordability will be crucial in attracting consumers who are under financial stress, particularly younger demographics facing high rent and student loan repayments.”
This certainly explains the current swath of high-interest consumer technology products for spenders, as across the board, PCs, tablets, and TVs have all benefited from the current AI boom, which is helping to drive more innovative features within products.
Earlier this year, Roku released its new professional series of streaming TVs which incorporates AI to automatically correct image quality for crisper viewing experiences. Samsung has also leveraged AI to improve 4K upscaling in its TVs, with LG using it to calibrate picture setting in real time on its TVs.
The findings also happen to coincide with some tertiary finding CE Pro has come across in its own research, as professionally installed home theater systems, once thought to be on the downturn following the pandemic, have seen an incredible resurgence in popularity among clients.
Note: Future of Technology forecasts and insights are based on forecasted sales of technology products captured in Circana’s Retail Tracking Service point-of-sale data.
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