Team AsiaBizToday –
SINGAPORE, September 25, 2023 – In spite of the skyrocketing cost of living in the region, the Asia Pacific (APAC) is going through a transformative phase, driven by fast-evolving market trends and shifting consumer behaviour. In Q1 and Q2 of 2023, unit sales in the APAC market dropped by around 6% and the total USD market value dropped by 1%. But companies remain hopeful about Q3 and Q4 of this year, with high expectations set for peak-season sales events such as Diwali, Black Friday and Christmas in the offing. Retailers will seek to clear their old stocks while the discount-driven events will see consumers strategically timing their purchases.
According to a GfK Global Consumer Life Study 2023, economic worries such as inflation lead the way in China and India, while in other markets such as South Korea and Indonesia grapple with concerns related to unemployment and recession.
Emerging markets such as India noted a 4% volume growth and an 8% value growth in the first half of this year, compared to the same period in 2022. Further, certain sectors have shown more resilience than others. Travel-related and household appliances industries have reached pre-pandemic levels. Notable performance variations in key subsegments during the first half of 2023 vs. 2022 include;
o Consumer electronics (TVs, soundbars, etc.): -7%
o Telecom (Smartphones, etc.): -1%
o IT (Mobile PCs, hardware, etc.): -5%
o Small domestic appliances (Fryers, mixer, etc.): -6%
o Major domestic appliances (ACs, oven, etc.): Flat
o Photo appliances (Camera, Camcorder, etc.): +22%
Products that have experienced year-on-year growth in spite of the pandemic are those that offer features such as sustainability, convenience, and adaptability, or accessible premium options. These have become pivotal factors in driving long-term demand for tech and durables in the APAC. 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 consumer attention.
In markets such as India, the demand for tech and durables remains resilient. For instance, sales of robot vacuum cleaners with docking stations and flexible work-oriented tech rose by 143% in the APAC during the first half of 2023, even as the overall vacuum cleaner market declined by 10%. Meanwhile, high-end models within affordable premium price bands continue to outperform the market average, especially in Consumer Electronics and Appliances.
Notably, traditional retail regained market share, and online sales rebalanced following peak sales months. China leads the region in online sales, with approximately 47% of tech and durables sales occurring online in the first half of 2023, marking a 2% increase from last year. Japan, developing Asia, and developed Asia collectively contributed about 14%, 31%, and 17% to the online market, respectively.
In light of the ongoing cost-of-living challenges, consumers in the APAC region are exercising deliberate discretion when it comes to making purchases. This heightened consciousness about expenditure has led to more strategic and thoughtful consumer behaviour. Promotions have emerged as a compelling factor in this context. As we progress into the second half of 2023, these promotional events are anticipated to play an important role in fuelling value growth within the APAC tech and durables market.
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.
GfK Consumer Life Study
GfK Consumer Life is the most comprehensive and longest-standing consumer trend study in the world. Its data has been collected annually since 1997 from over 30,000 consumers in more than 29 countries, providing market leaders with detailed information about all aspects of people’s lives, including their aspirations, personal values, future world outlook and concerns, lifestyle behaviours, and much more.