Consumers Will Be Buying More Expensive Electronic Products in 2021
The newly released edition shows retail value growth keeping pace with volume sales over the forecast period. A slew of new products, like smart wearables and wireless speakers, and innovations like Ultra HD and convertible laptops resonate with the shift in consumer preferences. These products command higher retail selling prices, helping to boost value sales. Previously, manufacturers and retailers had to resort to discounts to drive sales, affecting their profitability.
Source: Apple Inc
Wearable electronics: Poised to fulfil its promise
Wearable electronics is projected to hit US$45 billion in 2021 with activity wearables proving to be popular amongst fitness enthusiasts. Sales of the higher-priced and fully-featured smart wearables are gaining traction with the connected consumer. Value sales of smart wearables are expected to be worth more than five times as much as activity wearables by 2021. The appeal of wearables extends beyond the niche demographics of techies and fitness enthusiasts. Consumers are buying wearables as fashion accessories and to look cool.
Wireless speakers: Consumers paying for quality
Sales of wireless speakers are projected to reach 73 million units, a whopping 25% growth over the forecast period. Despite massive growth in smartphones, wireless speakers will remain a niche product, as not many consumers see a need to buy them. For consumers who buy wireless speakers, the quality of the speakers will be a primary purchase criterion. Established brands like JBL and Bose stand to benefit, as consumers are willing to fork out a higher price for proven quality.
Smartphones: Still the King of the Hill
While Samsung and Apple continue to dominate the market in 2016, a host of upstarts like Huawei (with a 9% share) and XiaoMi (7%) have overtaken established brands like LG and Sony in the global ranking. Huawei’s collaboration with Leica (a respected photography company) on its flagship model, Huawei 9P helped the Chinese manufacturer shed its image as a low-end manufacturer.
One in three smartphones sold in 2021 will sport a screen larger than 5.5”, as consumers use smartphones for computing, web browsing and as their primary camera. The shift towards larger screen helps to generate higher margins for the manufacturers too.
Laptops: Kudos to Microsoft
Computer manufacturers publicly expressed their anger when Microsoft started selling tablets and laptops in 2012, accusing the software giant of encroaching on their territory. What Microsoft actually did was to re-energise the category and pushed computer manufacturers to move away from low-priced models and focus on well-built laptops with higher margins. Unit prices of laptops are projected to stabilise at US$620 over the forecast period, helped by the popularity of convertible laptops.
Tablets: A cheap computer no more
Sales of tablets are being cannibalised by smartphones with screens larger than 5.5”. Even Apple has not been spared, as sales of iPads decline 13% in 2016. Rather than to reduce prices, manufacturers are pushing for convertible tablets bundled with detachable keyboards and larger screens that command higher price and consequently, higher margins. Convertible tablets will account for 40% of sales in 2021, providing relief to manufacturers faced with declining volume sales.
LCD TVs: More is better
The push for Ultra HD is paying dividends for TV manufacturers, as consumers are easily sold on the pretext that more pixels (higher resolution) equates to better video quality. Sales of LCD TVs are poised to grow despite cord cutters and the advent of OTT (over-the-table top) boxes. The fact that consumers are watching more shows on their mobile devices has helped sales of LCD TVs, as consumers have acquired the habit of multiscreen viewing (smartphones, PC and TVs). Retail value sales of LCD TVs are set to outperform volume sales in 2021.