The State of the Consumer Electronics Market
How COVID-19 Has Affected the Consumer Electronics Industry
As of this writing, the COVID-19 pandemic has yet to abate fully. In some regions, such as the United States, the disease continues to spread widely. Many people have lost their jobs and income, and many more are concerned about how the pandemic and associated economic downturn will impact their financial situation.
The economic uncertainty brought on by the pandemic has caused consumers around the world to rethink their spending priorities. A McKinsey report from July 2020 (& updated in Sept 2021) describes this behavior as “a shift to mindful shopping.”
Consumers in every major market expect to spend less on consumer electronics and more on groceries.
The report states: “As consumers hunker down for a prolonged period of financial uncertainty, they intend to continue shifting their spending largely to essentials, such as grocery and household supplies, and cutting back on most discretionary categories.”
According to McKinsey, consumers in every major market (with the notable exception of China) expect to spend less on consumer electronics and more on groceries.
Americans spent a record $10.86 billion on video games in the first quarter of 2020 - up 9% from the year before.
However, consumer electronics is a wide-ranging category. Some product types have seen skyrocketing demand during the pandemic.
For example, Americans spent a record $10.86 billion on video games in the first quarter of 2020 – up 9% from the year before. Stuck at home and inside, many consumers found comfort, escape, and connection in gaming.
PC and laptop sales also surged as the long-term reality of working and schooling from home set in.
A Shift to Ecommerce
McKinsey reports that consumers in every market expect to make more consumer electronics purchases online post-COVID-19 than before. This coincides with a general global increase in ecommerce activity in 2020.
The COVID crisis has put a strain on many businesses that weren’t ready for a spike in online sales or to deal with disruptions in their supply chain.
Changes in consumer behavior have also brought new fraud patterns.
For example, first-time buyers are typically considered higher fraud risks. But during the pandemic, the consumer electronics industry has seen more first-time online buyers than ever before. This makes sense because electronics are usually “safe” items to buy online; a smartphone is a smartphone, regardless of where you buy it.
Consumer electronics retailers can’t assume the usual patterns – such as a spike in first-time buyers, increased velocity, or increased volume – necessarily indicate fraud during a pandemic.
Businesses should adjust their fraud filters to accommodate altered buying habits. Otherwise, they will risk driving away legitimate (and new) customers.
