Many businesses have been caught off guard this year by changes in our spending choices. Americans eager to travel and party after spending most of their time at home for two years are eating plane tickets and more luxurious clothing — ignoring the patio furniture and plush pants we’ve spent in 2020.
Consumer electronics are arguably the burning center of Americans’ flip-flop shopping habits. Gadget buying has suddenly gone from hot to not, a change that is likely to cause pain and confusion for many businesses — 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 equipment to keep our homes productive and cozy that some products were impossible to find. However, experts warned that people would inevitably back off buying some types of gadgets until they needed them again.
The magnitude of the change after two years of gadget purchases has surprised many people. From January to May, electronics and appliance stores are the only retail category for which sales fell compared to the same five months of 2021, the Commerce Department announced last week. Best Buy said last month that purchases at its stores have declined across the board, especially for computers and home entertainment, and are likely to continue to do so. And research firm IDC expects global smartphone sales to fall this year, most strongly in China.
What’s bad for electronics manufacturers and retail stores could be good for us, but value hunters will have to be careful. Nathan Burrow, who writes about retail deals for Wirecutter, the New York Times’ product recommendation service, told me that prices are already being slashed for some electronics. But a sale when inflation is 40 years high in the US may not always be a good deal. A discounted product may still cost more than comparable models a few years ago, Burrow said.
The whiplash in shopping habits has left Walmart, Target, Gap and a few other retail chains stuck with too many of the wrong types of products. So are some types of electronics, meaning there are likely to be more price cuts during summer “vacations” at Amazon, Target, Best Buy, and Walmart.
Burrow predicts significant price cuts for tablets, Internet networking equipment, Amazon devices and some laptops, including Chromebooks.
Research firm NPD Group said this year that consumer electronics sales would most likely fall in 2022 and again in 2023 and 2024 — but two previous insane 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 that unexpectedly go through the roof and then suddenly collapse, is disorienting to gadget makers and sellers.
“It’s the unpredictability that makes everything worse,” said Jitesh Ubrani, research manager at IDC.
Making long-term forecasts is difficult for manufacturers, retailers and buyers of electronics. Some executives have said that worldwide shipping and availability of essential components such as computer chips may never be normal in 2019. Selected electronics such as low-cost TVs and laptops could disappear for good as manufacturers and retailers became addicted to higher profits from more expensive products.
In the electronics industry, experts told me there were talks about how we could do things differently to prepare for possible future crises, including by spreading more gadget production to countries other than China. It’s not clear how our spending could shift again in response to inflation, the government’s efforts to cool rising prices or a potential recession.
For a time, people in wealthy countries became accustomed to a steady flow of cheap and abundant electronics, furniture, clothing, and other goods thanks to interconnected global factories and shipping. The pandemic and the madness it has caused in supply chains has made some economists and executives reflect on the status quo.
It is possible that the ups and downs of electronics sales since 2020 will resolve themselves in a few years. Or maybe consumer electronics are a microcosm of a world changed by the pandemic and may never be quite the same.
Before we go…
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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 wider effort at the company and elsewhere in the tech industry to use artificial intelligence software more responsibly.
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A rural town in California is split over Amazon parcel delivery by drones: “I don’t want drones flying around my house — we live in the countryside,” a resident of Lockeford, Calif., told The Washington Post. (A subscription may be required.)
Related from On Tech last week: Where are the delivery drones?
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Is Google Search not what it used to be? The Atlantic looks at the shreds of truth — including relentless commercialization — behind the sense that Internet search is becoming less useful. †A subscription may be required.)
Hug for this
You must read my colleague Sarah Lyall’s article about Wasabi, the half-retired champion Pekingese who doesn’t play, run fast or do anything but enjoy his life.
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