It’s hard to believe in 2024 that electronic sales could be on the decline, but that’s exactly what’s happening. For the last two years, demand for electronics has been low, with companies like Best Buy reporting a revenue fall of around 7.8% in the third quarter of 2023.
This is in stark contrast to 2020, when more people than ever were buying everything from laptops to gaming consoles, to internet routers, ensuring that their homes were as productive and equipped as possible. So what exactly has changed, and what will electronics companies be doing to syphon the bleeding?
Why Are Sales Dropping?
The answer to why electronics companies’ sales are dropping is multi-faceted. For instance, there are different reasons why the sales of Xbox and Playstation are declining compared to the sales of home-tech gadgets.
Quite simply, these are hardware devices that are struggling to find their place in the modern, software-oriented world. When users are playing games at 21, they are doing so without the need for any specific device – so long as they have a smartphone, tablet, or laptop, they can do it. With the iPhone’s new A17 Pro chip, even AAA releases can be run effectively, and this is an example of accessible, convenient software winning out over hardware.
When it comes to the electronic industry as a whole, it’s fair to say that consumers are simply well-stocked. As mentioned before, 2020 was a strong year for electronics sales, as households around the world were ‘stocking’ up on their tech in the midst of the pandemic. If one family was holding off ordering a new television, or upgrading from an old iPhone, then they were sure to do so when their lives became constricted – and technology became all the more important.
But because smartphones, consoles, and other tech gadgets are built to last, an upgrade hasn’t been necessary. Add to this that there is an ongoing cost-of-living crisis, and buying habits have had to change considerably, it’s clear to see why the electronics industry is declining – and will continue to decline over the next couple of years.
What Can Be Done?
For electronics companies across the board, the key phrase might be: ‘sit tight’. According to recent data provided by the NPD Group, the electronics industry will continue to decline this year but is projected to return to a growth rate of 2% by the end of 2025. This is when the gadgets that consumers bought in 2020 will come to the end of their life cycle, and upgrades will finally become necessary again.
For companies that can’t afford to wait, it’s likely that we’ll be seeing an increased number of price cuts, and models with brand-new USPs to entice customers. This is where Apple has been leading the game recently. With the iPhone 15 Pro created with the A17 Pro chip, Apple even gave iPhone 14 users a solid reason to make the switch, despite only coming out a year later. And if rumours of a touchscreen Macbook are true, they might be about to do the same thing for laptop users too.
Innovation will be key for alternative companies looking to keep up. It’s clear that interest in technology and gadgets has not gone away, but the incentive to buy new tech has, and that incentive is what companies will have to work on.
If anything, this decline in sales is a good thing for consumers. Not only will they be getting better deals throughout 2024 and 2025, but it’s also likely to push electronics companies to innovate even further, finding new ways to engage customers and get them invested in new, groundbreaking products.
