Luxury Portable Consumer Electronics in the US

2021 DEVELOPMENTS

Recovery slightly softens the decline of mobile phones, yet the appetite for purchasing remains limited

As the US gradually emerged from the pandemic-induced economic crunch and social restrictions, demand for luxury portable consumer electronics continued to improve. However, growth was entirely thanks to luxury wearables, as although the decline of luxury mobile phones slowed slightly in 2021 compared with the previous year, it still saw a double-digit fall in current value terms.

Function and design upgrades, coupled with health awareness, add fuel to luxury wearables

Luxury wearables showed considerable resilience after suffering from pandemic-induced store closures and tighter budgets in early 2020, with growth seen overall in both 2020 and 2021. More budget-friendly brands such as Michael Kors generated the strongest sales gains.

E-commerce remains a key destination for exploration and purchases

COVID-19 ushered in a digital transformation that is expected to outlive the pandemic, even though manufacturers are largely back in production mode and most store-based retailers have reopened for business. Brands that have been fine-tuning digital storytelling and communications through multimedia campaigns on social media and digital tutorials, for example, will continue investing in digital branding and win an audience that has become more accustomed to online shopping.

PROSPECTS AND OPPORTUNITIES

Where functionality and aesthetics meet is a sweet spot

As the economy recovers and holistic wellness gains a renewed significance in consumers’ daily lives, smart wearables, including luxury wearables, will continue to gain popularity. Therefore, over the forecast period luxury wearables is expected to maintain a double-digit current value CAGR.

Price sensitivity and mounting product variety will squeeze luxury mobile phones

Meanwhile, sales of luxury mobile phones are expected to continue to decline, with a negative double-digit current value CAGR in the forecast period. This will be due to consumers’ lingering price sensitivity and, more importantly, the strength of non-luxury smartphone heavyweights such as Apple and Samsung, whose increasingly sophisticated offerings at a much more approachable price and multi-platform marketing are weighing on their luxury counterparts.

Digital innovation set to gain weight in the luxury experience

Physical store formats will regain importance as valuable assets for marketing and branding as store traffic resumes, but they are unlikely to overtake e-commerce in terms of connecting with a broader audience and generating sales. As consumers increasingly turn online for product research, brand communications and final transactions, their expectations of a consistent elite customer experience at virtual stores will grow.