Consumer Electronics Trends, Innovation & Agility

Steve Flagg is the CEO and founder of Supplyframe.

The holiday shopping season is when consumers open their wallets to purchase gifts for friends and families—and sometimes even themselves. Adding to the merriment is the fact that we’ve reached a new normal on healthy indices and buying patterns—particularly in North America, where Adobe predicted shoppers would spend a record $241 billion online this holiday season.

Electronics, apparel, furniture and home goods will account for more than half of that—and consumer electronics and electronics embedded in home appliances, digital services and experiences are increasing their share of consumers’ e-commerce spending.

That’s largely good news, but it makes electronics suppliers more vulnerable to challenges around lead times, inventory and aligning with end-of-year demand. Here’s what to consider during this holiday shopping season and the approaching new year.

Shoppers may be distracted, and the season is shorter.

This holiday buying season, the presidential election and geopolitical events are dividing consumer attention. High inflation is creating a drag on consumer spending. Plus, there’s a compressed peak holiday shopping season. BCG notes that a late Thanksgiving in 2024 will mean five fewer shopping days than in 2023 and adds that Hanukkah is also later this year.

Earlier promotions are a growing trend, starting with Black Friday and Cyber Monday. As a result, there’s less aggressive discounting and a greater blurring of promotional peak volumes driven by each of those promotional windows.

The overall effect is ramping e-commerce purchases a little bit earlier and more consistently as opposed to purchases shooting into full hockey stick mode as we move into December.

Innovation and consumer adoption are selective.

Over the last few years, several key consumer electronics companies stalled new product launches due to delays in their engineering capability or inability to secure key electronics components in time. This year, more innovations are landing in time for the holidays, but it’s still been selective. In many cases, the innovations haven’t been enough for consumers to get excited about.

Wi-Fi 7 isn’t enough to incent most customers to upgrade home automation and other technology. While Apple has been relatively successful with its recent iPhone launch, it has struggled (along with others) to clearly differentiate new from existing products in its portfolio in a way that motivates consumers to upgrade now or gift its latest devices. However, AI is becoming an important factor in consumer electronics as Apple, Google, Samsung and others infuse their devices and services with AI capabilities.

Spending on home automation tends to spike around the holiday season. It’s not spiking now, but it’s been healthy. Falling interest rates could trigger a new wave of home sales and move-ins, creating the potential for more investment in home automation. However, some consumers are now reluctant to invest in the most technically advanced devices and appliances, understanding that more tech features can make diagnosing problems harder and undercut product reliability.

AI is giving smartphones and PCs new life.

According to Counterpoint research, smartphone shipments will grow around 5% year-over-year in 2024 after two years of declines. IDC noted that the PC market also grew in the first two quarters of 2024 amid new momentum in corporate upgrade shipments and general excitement around the consumerization of AI.

Just look at what’s happening with laptops, which faced negative year-over-year total consumption volumes after a peak during the pandemic work-from-home boom. Now, the laptop space is picking up again because of the potential need to upgrade computers to take advantage of AI-based or edge-based services. It’s already happened in the data center space.

Despite normalization, constraints exist.

Consumer electronics has faced cost inflation for key components and capacity constraints, but the market’s cost drivers have now stabilized, and lead times are generally better than they were in 2023—and definitely improved from the year prior—for most electronic components.

Nearly three-quarters of all Supplyframe Commodity IQ electronic component pricing dimensions for the second half of 2024 will be either stable, flexible or declining. The Commodity IQ also indicates the second half will conclude with 52% of all component lead times contracting with no constraints, dramatically improving to 90% without considering memory and storage.

However, there are severe shortages of the high-bandwidth memory DRAM on which the AMD and NVIDIA GPUs powering AI rely, and the availability of other memory and storage are becoming more constrained, which could impact laptops and potentially mobile phones in the near term.

Prepare your company for evolving supply chain challenges.

Additional risks could arise as the industry ramps to volume with AI solutions and hit new innovation cycles for key consumer electronics and as OEMs address seasonal opportunities.

Much of the risk mitigation will initially manifest as sellers do more targeted product promotions where they have clear lines of sight to protect the continuity of supply and take a conservative approach in pre-market inventory positioning rather than stuffing the channel. Many consumer electronics companies are also working to expand their product portfolios to include a broader range of cost and capability options to appeal to different buyer groups.

If you’re a consumer electronics manufacturer, also work to gain real-time visibility into what’s happening in the market with electronics component demand, operationalize those contextual risk insights and build in resilience to new product design by adopting a shift-left strategy.

Watch what happens this season and learn from what you see over the next few months. This holiday season will be a proving ground for consumer electronics companies that can strike the right balance between bringing their innovations to market faster than competitors and staying agile in their response to new market demands and preferences.

The winners of the holiday buying season won’t necessarily just be the top brands. Newcomers that can drive innovation and time to market may also emerge to take share from top suppliers. With the right market intelligence and strategy, your company could be on that enviable list.

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