Gadgets Were Hot. Now They’re Not.
A lot of companies have been caught off guard by changes in our spending choices this year. Americans eager to travel and party after two years of staying largely at home are gorging on plane tickets and fancier clothes – and ignoring the patio furniture and soft pants that we splurged on in 2020.
Consumer electronics may be the flaming center of Americans’ flip-flopping shopping habits. Gadget buying has suddenly switched from hot to not, a change that will most likely bring pain and confusion for many companies – and potentially some great deals for people who still want to buy electronics.
In the early months of the pandemic, many of us were so eager to buy internet routers, laptops, video game consoles and other tech gear to keep us productive and cozy from home that some products were impossible to find. However, experts cautioned that people would inevitably pull back on buying some types of gadgets until they needed them again.
The magnitude of change after two flush years of gadget purchases has surprised many people. From January through May, electronics and appliance stores make up the only retail category for which sales fell compared to the same five months of 2021, the Commerce Department disclosed last week. Best Buy said last month that purchases at its stores dropped across the board, especially for computers and home entertainment, and are likely to stay meh. And the research firm IDC expects global smartphone sales to decline this year, most sharply in China.
What’s bad for electronics manufacturers and stores could be good for us, but value hunters will need to be careful. Nathan Burrow, who writes about shopping deals for Wirecutter, the product recommendation service from The New York Times, told me that prices for some electronics are already being discounted. But a sale when inflation is at a 40-year high in the US may not always be a good deal. A discounted product might still cost more than similar models a few years ago, Burrow said.
The whipsaw in shopping habits has led Walmart, Target, Gap and some other retail chains to be stuck with too much of the wrong kinds of products. That’s true about some types of electronics, too, which means that more price chopping is likely during summer shopping “holidays” from Amazon, Target, Best Buy and Walmart.
Burrow predicts significant price breaks are coming for tablets, internet networking equipment, Amazon devices and some laptops including Chromebooks.
The research firm NPD Group said this year that consumer electronic sales would most likely decline in 2022 and again in 2023 and 2024 – but two previous bonkers years of electronics sales would still leave overall sales higher than they were in 2019. Despite the overall higher sales , this phenomenon of electronics sales unexpectedly going through the roof and then suddenly sinking is disorienting for gadget makers and sellers.
“It’s the unpredictability that makes everything worse,” said Jitesh Ubrani, a research manager at IDC.
Making long-term predictions is tough for manufacturers, retailers and buyers of electronics. Some executives have said that global shipping and the availability of essential components like computer chips may never be 2019 normal. Select electronics like super-low-priced TVs and laptops could be gone for good as manufacturers and retailers became hooked on higher profits from pricier products.
In the electronics industry, experts told me that there were conversations about how to do things differently to prepare for potential future crises, including by spreading more gadget manufacturing to countries other than China. It’s not clear how our spending may shift again in response to inflation, the government’s efforts to cool off climbing prices or a potential recession.
For a while, people in rich countries grew accustomed to a steady stream of cheap and abundant electronics, furniture, clothes and other goods thanks to interconnected global factories and shipping. The pandemic and the wackiness it set off in supply chains have made some economists and executives rethink the status quo.
It’s possible that the ups-and-downs of electronics sales since 2020 will sort themselves out in a couple of years. Or perhaps consumer electronics are a microcosm of a world changed by the pandemic that may never quite be the same again.
Before we go
Microsoft will remove features that claim to identify a person’s age, gender and emotional state from its facial recognition technology. My colleague Kashmir Hill reported that this decision was part of a broader effort at the company and elsewhere in the tech industry to use artificial intelligence software more responsibly.
A rural California town is divided on Amazon package delivery by drones: “I don’t want drones flying around my house – we live in the country,” one resident of Lockeford, Calif., Told The Washington Post. (A subscription may be required.)
Related from On Tech last week: Where are the delivery drones?
Is Google Search not what it used to be? The Atlantic looks at the shreds of truth – including ruthless commercialization – behind the feeling that web search is becoming less useful. (A subscription may be required.)
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You must read my colleague Sarah Lyall’s article about Wasabi, the semi-retired Pekingese champion who doesn’t play fetch, run fast or do anything much besides enjoy his life.
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