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How Apple and Other Electronics Companies are Managing Inflation

October 2022

Faced with high inflation, caused in large part by rising energy costs, manufacturers are trying to find ways to avoid increasing prices, as consumers are becoming increasingly cautious regarding their spending. This reports looks at how manufacturers are responding to inflationary pressures.

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Key Findings

Supply problems and higher energy prices add to inflation

The Eurozone is forecast to face higher inflationary pressures over 2022-2023, largely due to rises in energy prices and potential energy supply disruptions from Russia. Any energy supply disruptions would place more pressure on the profit margins of businesses.

Pinching pennies to fight inflation

Reusing old parts and designs, removing accessories and offering affordable models are some of the measures manufacturers are adopting to ease inflationary pressures and avoid increasing prices.

Exploring new business models

Manufacturers are pivoting their businesses towards services and accessories, which offer higher margins, instead of raising prices.

Adding more features to justify increases in prices

Businesses need to continue to grow their revenues and maintain margins, and will be reluctant to absorb cost increases. Adding more features or new technology can help to mask the increase in product selling prices.

Scope
Key takeaways
Supply problems and higher energy prices add to inflation
Commodity price growth eases, but challenges in the energy sector remain
Higher energy costs could accelerate price growth for manufactured goods
Key risks for inflation in 2022 and 2023
Inflation forecasts: Q3 2022
Reusing parts to keep cost low and supply chain robustness
Upselling accessories and services
Adding more features to justify increase in price
Flexible payments to stretch the dollar
Introduce a new supplier for competition
Affordable flagships to drive sales
Right-sizing the company
Examining the effectiveness of the cost management measures

Consumer Electronics

Consumer Electronics refers to the sales of Computers and Peripherals, In-Home Consumer Electronics, In-Car Entertainment and Portable Consumer Electronics to the end consumer.

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