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The worst of the pandemic may be over in many parts of the world, but business leaders in consumer technology and durables still face a rocky road ahead. But it’s not all doom and gloom. Brands and retail teams that arm themselves with timely, data-informed intelligence and cultivate the ability to evolve can still reach sustainable growth and cater to changing consumer needs. A business intelligence provider for the global consumer products industry, GfK unpacks the macro-trends and challenges of 2022 and shows business leaders what they can do to optimise their offerings.
Macro-trends for 2022
After seeing significant growth in 2021 following the emergence of new living, working and consuming trends on the back of the Covid-19 pandemic, the consumer technology and durables industry faces a number of hurdles in 2022 and beyond. A confluence of challenges, including inflationary pressures, supply chain disruption, declining consumer confidence, environmental concerns and, of course, the war in Ukraine, will put business leaders through their paces this year and beyond.
Deceleration – Against a backdrop of restricted travel, remote working and social distancing, the value of the market grew by a record high of 12.2 per cent in 2021. At-home coffee machines, juicers, tablets and wearable technology – previously seen as luxuries – suddenly became more essential. While the market looks set to continue its upward trajectory this year, there will be an inevitable slowdown, with a forecast value growth rate of just 2 per cent, representing a drop of approximately $110bn.
Inflation – Although the global economic recovery has so far been fairly stable, GfK predicts that the rebound will lose momentum as a result of inflationary pressure that’s pushing up both costs for brands and prices for consumers.
Inflation is being driven by:
- Ongoing disruptions in energy, food and commodity markets
- Fuel shortages, which are pushing up manufacturing costs
- Supply chain disruptions that are causing bottlenecks and shortages of goods
Declining consumer confidence – The picture of global consumer confidence remains fragmented and unpredictable. While an easing of the most acute pandemic restrictions in most regions appeared to temporarily alleviate some consumer uncertainties, inflation, rises in food and energy prices, new Covid variants and the war in Ukraine have dented confidence once again. According to GfK, only 34 per cent of consumers believe their economic situation will improve 12 months from now, compared with 41 per cent in 2019.
Solutions and strategies
However, all is not lost. GfK will offer strategies to help brands and retailers weather the storm during its Decode the Future virtual event in May. Whether revamping lines to include premium and sustainable products or leaning about data to guide direction, bosses who listen and respond to the market can still win big.
Premiumisation – Despite dwindling consumer sentiment, GfK says consumers are willing to pay more for products with perceived quality or added value. Premium lines and stronger, bolder brand identities that connect emotionally with consumers could help businesses elevate price points to alleviate the decline in demand.
Invest in the new normal – A new hybrid work culture has emerged since the start of the pandemic. While many consumers satisfied their need for personal electronics and at-home appliances in 2020, smart brands should create products that tap into the new, more connected consumer personas that have emerged. Appliances with multiple functions and electronics that provide convenience via the internet of things will stand out from the crowd.
Seamless omni-channel – Covid-19 has accelerated consumer migration online, with demands for brands and retailers to provide offerings across multiple channels continuing to grow. GfK advises using AI-powered data, industry expertise and cross-functional collaboration to guide a holistic omni-channel approach for a seamless user experience.
Go early on ethical – Opportunities abound in social and environmental sustainability for consumer technology and durables. Business leaders can put themselves in a leading position by acting first on sustainability, demonstrating added value for consumers and avoiding the potential risks of not acting quickly enough.
Be data-driven and agile – With the war in Ukraine and Coronavirus just two of several unpredictable global factors, C-suites should try to anticipate pressure on the cost of goods, supply chains and consumer finances. Use data and analytics to monitor consumer sentiment and priorities more closely and be ready to switch strategy when the market demands it.
For more insights on how to manage risk and unlock opportunities in today’s ever-changing landscape, watch the replay of Decode the Future 2022, a GfK virtual event that took place on 19 May. The agenda was packed with industry-leading experts who discussed how economic and supply challenges impact brands and retailers and what it will take to adapt to changing consumer needs and win in these unpredictable times.
Originally published on Business Reporter
