Consumer electronic spending plummets as recession worsens

Posted by STARR KESHET

The US consumer electronics (CE) market has been hit disproportionately hard by the Great Recession, with households projected to spend 17% less on CE in 2010 than the previous year.

Interestingly enough, the expected decline in US CE spending is the largest amongst the 20 countries surveyed by IDC in the context of a recent ConsumerScape study.

To be sure, the emerging BRIC markets (Brazil, Russia, India, and China) are predicted to lead recovery with household CE spending gains of more than 20% year over year.

Consumer electronic spending plummets as recession worsens"We believes there are [currently] six distinct consumer segments in the US CE marketplace: Engaged Hipsters (young and trendy, likely to buy the latest and coolest devices); Tech Evangelists (the most adept, and influential, technology users) and Savvy Sale Shoppers (moderate interest levels but will buy if the price is right)," explained IDC researcher Michael DeHart.

"[There are also] Impulse Buyers (high income buyers that purchase whatever new products catch their eye); Socially Conscious Basic Buyers (family and environmentally focused, unlikely to buy what they don't need); and Disengaged Functionalists (low income buyers with little interest in CE)."

According to DeHart, IDC found that more than half of the US population can  be characterized as basic buyers (Disengaged Functionalists and Savvy Sale Shoppers), reflecting the current dismal state of the US economy. 



Moreover, the number of Disengaged Functionalists is significantly higher in the US (34%) than in the other countries surveyed (16% worldwide).

"The survey found US consumers to be extremely price sensitive, a clear sign that the economic downturn has had an impact not only on spending habits, but also on consumer psychology. 



"At the same time, US consumers are far less likely to buy simple, basic devices, which is indicative of the population's strong affinity for consumer electronics."

Nevertheless, DeHart emphasized that a number of "important opportunities" still existed for CE manufacturers in the US, including:

  • PCs - As US households shift toward notebooks, PCs will increasingly be viewed as personal CE devices, fueling long-term growth in notebook PCs as well as PC peripherals.
  • Smartphones - With only 28% of US households owning a smartphone, growth in this category is a "sure thing," to be accompanied by a range of features, data plansand apps to suit different budgets.
  • HDTV - Although HDTV ownership has already crossed the 50% mark amongst US households, the market is expected to continue its dramatic growth trajectory.

"Even though US consumers are spending less on CE, they still own more devices (an average of 15.4 major devices per household) than in other geographies. 



"[In addition], US consumers still tend to buy higher-end devices with more features and functions than consumers in other markets," he added.