NPD Group: Trade-ups, price increases to fuel growth in U.S. consumer tech market
Consumer electronics revenue is expected to grow 3% annually through 2021 in the U.S. consumer marketplace.
That’s according to the new Future of Tech report from The NPD Group. Desire for big screen TVs, product innovations in wireless headphones, continued home automation adoption, and rising interest in smart displays will fuel growth, the report said.
“Steady single-digit growth is notable in a mature market where consumers are not replacing or repurchasing items at the same rate they did in prior years,” said Stephen Baker, VP, industry advisor for The NPD Group. “While some categories offer new, greenfield growth opportunities, the majority of revenue growth will occur from trade-ups and average sales price (ASP) increases, as opposed to rising unit volume sales.”
In mainstay categories consumer expectations are changing the product mix, and the movement to large screen TVs is raising category revenues, despite expected flat unit sales overall, according to NPD. By 2021, one in four TV unit sales will be for a screen size larger than 65-inches, and those will account for 60% of the category’s sales dollars.
In audio, true wireless headphones have become the format of choice for consumers and are expected to see tremendous growth over the forecast period. Based on Future of Tech report findings, such headphones will hold three-quarters of the headphone market dollar share by 2021.
“True wireless earbuds have evolved into virtual must-have mobile phone accessories, and many products now offer features such as hands-free digital assistant access and touch/tap controls for interfacing and controlling smartphones,” said Ben Arnold, executive director, industry analyst. “This bond between headphone and smartphone will help drive new sales in the future. Headphones is just one example of a mainstay category that is driving growth through new feature sets, we expect brands in other segments will take a similar approach to find growth in this competitive environment.”
While smart home technology will begin to slow compared to recent years, NPD expects it will remain an area of strength as decreases in ASPs will make products more accessible and drive acceptance among consumers. Home automation revenue is expected to grow 40% from 2018 to 2021. During this timeframe smart display dollar sales are expected to triple as they become more available and serve both as a smart home interface device and a point of modern convenience.