According to GfK Global Consumer Life Study 2023, economic worries, particularly inflation and high prices, are at the forefront of consumer worries in China and India. Other markets, including Indonesia and South Korea, grapple with concerns related to recession and unemployment.
While the decline in the APAC tech and durables market aligns with trends observed in China and Japan, some emerging markets like India witnessed a notable four percent volume growth and eight percent value growth in H1 2023 compared to the same period last year.
The consumer tech and durables industry in Asia Pacific is experiencing a transformative phase, driven by fast evolving market trends and shifting consumer behavior.
Based on the latest GfK Market Intelligence, Mukund Tripathi – tech and durables Expert for APAC sheds light on the current state and prospects of the tech and durables market. In the first half of 2023, the APAC market dropped -6 percent in unit sales and -1 percent in total market USD value.
However, companies set high expectations for region-wide peak season sales events like Christmas, Black Friday and Diwali. These events are anticipated to feature discounts driven by consumers strategically timing their purchases and retailers seeking to clear higher-than-average levels of old stock.
Despite declining growth amid adjustments across APAC, consumer demand for tech and durables remains resilient in certain markets, such as India.
Resilient sectors in the APAC Market
Amid the challenges, certain sectors have shown resilience. Travel-related industries, including the camera and household categories like appliances, have remained above pre-pandemic levels. Notable performance variations in key subsegments during H1 2023 vs. 2022 include:
•Consumer Electronics (TVs, soundbars, etc.): -7 percent •Telecom (Smartphones, etc.): -1 percent •IT (Mobile PCs, hardware, etc.): -5 percent •Small Domestic Appliances (Fryers, mixer, etc.): -6 percent •Major Domestic Appliances (ACs, oven, etc.): Flat •Photo Appliances (Camera, Camcorder, etc.): +22 percent
Retail landscape transformation and regional variations
Notably, traditional retail regained market share, and online sales rebalanced following peak sales months. China leads the region in online sales, with approximately 47 percent of tech and durables sales occurring online in the first half of 2023, marking a two percent increase from last year. Japan, developing Asia, and developed Asia collectively contributed about 14 percent, 31 percent and 17 percent to the online market, respectively.
Consumer cautious spending towards tech and durable purchases varies by region. While Japan and Developed Asia are grappling with revenue declines, China and India continue to exhibit growth, with increases of six percent and 10 percent, respectively, in the second quarter of 2023 compared to the same period last year.
Convenience reigns and affordable premium in the APAC market
While the previous year witnessed supply chain volatility, the current year has been marked by fluctuations in consumer demand. As the supply chain has regained stability, the decline in consumer demand has resulted in a decrease in overall revenues. Both dealers and manufacturers must now shift their focus towards long-term strategies to captivate consumers' attention.
Notably, products that have experienced year-over-year growth despite these challenges are those that offer features such as sustainability, convenience and adaptability, or accessible premium options. These features have become pivotal factors driving long-term demand for tech and durables in APAC.
For instance, sales of robot vacuum cleaners with docking stations and flexible work-oriented tech surged by 143 percent in APAC during H1 2023, even as the overall vacuum cleaner market declined by -10 percent.
While premiumization demand is not as strong this year vs. 2022, high-end models within affordable premium price bands continue to outperform the market average, especially in consumer electronics and appliances. For example, while the overall APAC TV market is down three percent in the first half of 2023 compared to the same period last year, the sales volume of premium TVs over 75 inches increased by 45 percent, and mid-price tiers witnessed a growth of 59 percent.
Strategic purchases and promotions amid the cost-of-living crisis
In light of the ongoing cost-of-living challenges, consumers in the APAC region are exercising deliberate discretion when it comes to making purchases.
“Price continues to be an important aspect of purchases in several categories - approximately half of surveyed global consumers cite cost as a factor for smart homes, cars, and green products. The prevailing economic landscape has prompted consumers to prioritize affordability and value, making price one of the key considerations in their buying decisions.” – Tripathi further added.
This heightened consciousness about expenditure has led to more strategic and thoughtful consumer behavior. Promotions have emerged as a compelling factor in this context. Events like China's 6.18 and the burgeoning trend of double-digit sales promotions in Southeast Asian regions (e.g., 10.10, 11.11, 12.12) have yielded significant positive results. These promotions have resonated with consumers, providing them with opportunities to access desired products at attractive price points.
Seizing the APAC Opportunity
According to GfK Global Consumer Life Study 2023, consumers’ personal economic confidence is always much higher in emerging markets, and it has rebounded in the last two years. In contrast, confidence continues to drop in developed markets.
In conclusion, despite the challenges faced by the APAC tech and durables market, it remains a landscape ripe with opportunities for growth. Sectors aligned with sustainability and convenience show consistent resilience and continue to attract consumer interest. As the region evolves and adapts to changing consumer preferences and market dynamics, industry players are encouraged to be proactive and flexible. Understanding the intricacies of the APAC market and aligning strategies accordingly will be crucial to unlock the full potential of this dynamic and evolving marketplace.