August 10, 2021
The pandemic helped drive consumer electronics sales in 2020, and that momentum is continuing in 2021, according to new data from The NPD Group. As a result of strong sales and rising retail prices in the first six months of the year, The NPD Group said U.S. consumer technology revenue in 2021 is expected to surpass 2020 totals by 7%, while unit sales for the year will see a 1% decline.
Port Washington, N.Y.-based NPD estimates sales for 2021 will reach more than $113 billion, up 4% increase from earlier estimates. In 2022 and 2023, NPD expects revenue to be down year over year 7% and 4%, respectively, and unit sales will see a 6% and 5% decline.
“The higher than expected [average selling prices] we are seeing in the market today can be attributed to increased shipping costs, component shortages, consumer readiness to trade-up to a higher cost product to meet their needs, and lack of promotional activity,” Stephen Baker, VP and industry advisor, said in a statement.
Baker said the aforementioned factors have driven total revenue projections up, but higher prices would inevitably lead to lower consumer demand, resulting in unit sales declines in categories such as TVs, networking devices, and printers in the back half of the year.
“Following the historically high sales in 2020 and 2021, we are anticipating near-term declines with a slow climb back to normalcy by the end of 2023,” he said.
The current third quarter is forecasted to be the most challenging revenue quarter for the CE business since the pandemic began due to difficult comps to Q3 2020. But NPD’s forecast predicts a temporary return to revenue growth in Q4 2021, up 2% year over year, despite a 5% decline in unit sales, again driven by pricing and product availability. This is noteworthy revenue growth given the strong CE sales recorded in Q4 2020.
“Revenue growth in Q4 will be driven by higher prices in the industry’s most popular holiday categories like big-screen TVs, PCs, gaming and audio,” said Ben Arnold, executive director and tech industry analyst at NPD. “As consumers trade-up to better, more feature-laden technology products, they will also have to contend with fewer and shallower promotions.”