Global Market for Technical Consumer Goods Turns Positive in 2020
The global market for technical consumer goods (excluding North America) displayed resilience to COVID-19 pandemic with a value growth of +2 percent in the full year, according to GfK. Consumers turned to tech to continue working and learning while staying at home, which led to a surge in demand for IT and Office products.
Equally important was the need for the convenience offered by home appliances to cook and clean, especially in Europe and other affluent regions. After the market contraction of April 2020 with a sales value decline of almost 25 percent, it looked like COVID-19’s impact would be devastating. But the markets recovered as the year unfolded.
There is a clear divide between Developed and Emerging regions globally. In Europe and Developed Asian regions, consumers invested in their homes (+8 percent value growth in 2020 Year-on-Year). Emerging markets in Asia and Latin America, however, posted a decline of -4 percent versus 2019. Being hit first in January 2020, heavyweight China contributed to this negative result. The market recovery in China accelerated as 2020 progressed but was unable to compensate for the losses overall. And the world’s biggest lockdown in India devastated all sales in the month of April across the country.
COVID-19 disrupted consumers preferred purchasing channels. GfK’s experts believe that the boost to the e-commerce channel driven by the 2020 lockdowns is irreversible, and consumers have high expectations of the channel for 2021. But the biggest winners in the top five European markets (Germany, UK, Italy, Spain, France) were not the pure online players who grew at a strong +39 percent versus 2019. Rather, it was the online shops of traditional retail that outperformed the market, with +69 percent uptick. Many consumers remained loyal to their known physical retailers when they were forced to move their shopping online. As a result, peak growth rates of 200+ percent became a reality during some lockdown weeks.
So far in 2021, high COVID-19 infection rates have mainly impacted Developed markets, particularly Europe and the Americas. In comparison, to date Asian countries have often been able to avoid new lockdowns. When comparing last year’s initial March/April lockdowns with those in November/December in the five biggest European countries, the overall negative effect seems reduced. In fact, sales of technical consumer goods even increased during week 47 of 2020 to week 2 of 2021, up by 11 percent.
As markets have shifted from demand- to supply-driven, growth dynamics will rely even more heavily on the industry’s ability to get the right products to consumers at the right time. As long as contact restrictions are in place, strong demand will continue to shape the tech and durables retail scene. And the expected economic recovery in the emerging Asian countries will drive demand there putting further pressure on supply. On the other hand, what GfK expects to see, especially in Developed markets, is sales declines once the focus shifts from staying home in the second half of 2021, assuming a high success rate for vaccinations.