Gadgets Were Hot. Now They’re Not.

A lot of companies have been caught off guard by changes in our spending choices this year. Americans eager to travel and party for two years after staying largely at home gorging on plane tickets and fancier clothes – and ignoring the patio furniture and soft pants that we splurged on in 2020.

Consumer electronics may be the flaming center of Americans’ flip-flopping shopping habits. Gadget buying has suddenly switched from hot to not, a change that will bring most pain and confusion to many companies – and possibly some great deals for people who still want to buy electronics.

In the early months of the pandemic, many of us were so eager to buy internet routers, laptops, video game consoles and other tech gear to keep us productive and cozy from home that some products were impossible to find. However, experts cautioned that people would inevitably pull back on some types of gadgets unless they needed them again.

The magnitude of the change after two flush years of gadget purchases has surprised many people. From January through May, electronics and appliance stores make up the only retail category for which sales fell compared to the same five months of 2021, the Commerce Department announced last week. Best Buy said last month that purchases at its stores dropped across the board, especially for computers and home entertainment, and are likely to stay up. And the research firm IDC expects global smartphone sales to decline this year, most sharply in China.

What’s bad for electronics manufacturers and stores could be good for us, but value hunters will need to be careful. Nathan Burrow, who writes about shopping deals for Wirecutter, a product recommendation service from The New York Times, told me that prices for some electronics are already being discounted. But a sale when inflation is at a 40-year high in the US may not always be a good deal. A discounted product might still cost more than similar models a few years ago, Burrow said.

The whipsaw in shopping habits has led Walmart, Target, Gap and some other retail chains to become stuck with too much of the wrong kind of products. That ‘s true about some types of electronics, too, which means more price chopping is expected during summer shopping “holidays” from Amazon, Target, Best Buy and Walmart.

Burrow predicts significant price breaks for Chromebooks including tablets, internet networking equipment, Amazon devices and some laptops.

The research firm NPD Group said this year that consumer electronics sales would decline most in 2022 and again in 2023 and 2024 – but two previous bonkers of electronics sales would still leave overall sales higher than they were in 2019. , this phenomenon of electronics sales is suddenly going through the roof and then suddenly sinking is disorienting for gadget makers and sellers.

“It’s the unpredictability that makes everything worse,” said Jitesh Ubrani, a research manager at IDC.

Making long-term predictions is tough for manufacturers, retailers and buyers of electronics. Some executives have said that global shipping and availability of essential components like computer chips may never be 2019 normal. Select electronics like super-low-priced TVs and laptops could be gone for good as manufacturers and retailers become hooked on higher profits from pricier products.

In the electronics industry, experts told me there were conversations about how to do things differently to prepare for potential future crises, including spreading more gadget manufacturing to countries than other countries. It’s not clear how our spending may shift again in response to inflation, the government’s efforts to cool off climbing prices or a potential recession.

For a while, people in rich countries have grown accustomed to a steady stream of cheap and abundant electronics, furniture, clothing and other goods thanks to interconnected global factories and shipping. The pandemic and the wackiness it set off in supply chains has made some economists and executives rethink the status quo.

It’s possible that the ups and downs of electronics sales since 2020 will sort itself out in a couple of years. Or maybe consumer electronics are a microcosm of a world changed by the pandemic that may never quite be the same again.

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You must read my colleague Sarah Lyall’s article about Wasabi, the semiretired champion Pekingese who does not play fetch, run fast or do anything more besides enjoy his life.

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