Sales of consumer electronics are projected to undergo a V-shaped recovery, following a 5% decline in value terms in 2020. As consumers become accustomed to the new normal, sales are forecast to return to growth in 2021.
Sales of consumer electronics plummeted in 2020 due to the pandemic, as consumers cut down on discretionary purchases. With most markets emerging from lockdowns on a gradual basis, sales of consumer electronics are forecast to turn positive in 2021. That said, total sales are expected to recover to pre-pandemic levels from 2023.
Euromonitor International’s 2021-2025 baseline forecast for the electronics industry, published in November 2020, has been updated in line with the new macroeconomic outlook. Reflecting the timeline of a gradual reopening of society, the step-by-step ending of lockdowns and a return to some degree of normality in the second half of 2021, our top line projection has seen only a marginal overall downgrade.
While consumer confidence was dented due to the pandemic, brands such as Xiaomi and TCL benefited as consumers looked for brands that offer better value for money. On the other hand, established brands such as Samsung and Apple are not expected to engage in price wars to boost sales, instead, more likely to focus on flagship products that offer higher margins.
Companies are investing to reinvigorate consumer electronics demand with new enhancements to attract consumers. For example, LCD panels are now undergoing a massive upgrade to bridge the picture quality deficiency with OLED. Similarly, the rollout of 5G networks will also help push up average prices of smartphones and trigger strong demand for new models.
The pandemic exposed the overreliance of companies on China as a manufacturing hub. The ongoing trade war between the US and China also left companies exposed to any change in trade policies. Companies will accelerate their plans for alternative production sites outside China.
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