Consumer Electronics Holiday Outlook Highlights Mixed Signals with Opportunity

The 2024 holiday shopping season presents a complex landscape for consumer electronics, with overall tech spending intentions reaching a four-year high despite significant demographic variations and economic concerns. The shopping season will be more condensed around the core Black Friday to Christmas Eve period than we’ve seen in a while, and consumers will be very sensitive to promotions and pricing. However, the environment offers both opportunities and challenges for retailers and manufacturers as they navigate the season. 

The commentary below weaves together insights from Circana’s 2024 Annual Holiday Purchase Intentions Study and product sales trends captured in our market measurement data, as well as my observations and expectations for the consumer tech industry this season.  

Category Trends Reveal Traditional Strength Mixed with Stagnating Growth Among Leaders 

Smartphones continue to dominate holiday tech wish lists, but purchase intent has plateaued despite new AI capabilities. Even as devices become more sophisticated and capable, market saturation, longer replacement cycles, and rising certified pre-owned purchases are a reality. Lack of growth in this traditionally strong category signals a shift in consumer priorities and an opportunity for manufacturers, retailers, and carriers to clearly demonstrate the value and benefits of AI. There are also potential impacts on adjacent categories like accessories, device protection, mobile power, and more.

Notebook computers are seeing renewed interest, likely driven by a looming replacement cycle feeding off the early pandemic purchases. While growth in recent months has returned, it is imperative that retailers help educate and engage consumers around interest in AI-enhanced products. At a minimum, AI PCs offer the opportunity to generate a conversation around consumers’ current products and what a new device can offer.

Television sets, particularly XXL models bigger than 75 inches, are experiencing strong growth as consumers continue to invest in home entertainment. The average price for 98-inch and larger TVs has fallen below $3,000, and we are expecting some models well below $2,000 this holiday. There is a large install base of 65- and 75-inch TV owners looking to upgrade. According to the latest Connected Intelligence TV Ownership Trends report, nearly 22% of households have a 60-inch or larger TV, double what we saw at the beginning of 2020.

Smartwatch interest has grown this holiday season, and evolved health and wellness features are at the center of maintaining this momentum, as well as improvements like new form factors and longer device battery life.

Tablets are making a surprising comeback this year after Apple refreshed its lineup in the spring, with strong growth in the back-to-school season, and consumers are indicating that this interest will carry into the holiday season. 

Digital imaging has shown life in 2024, with growing sales for digital point-and-shoot cameras, mirrorless interchangeable lens cameras, and action cameras that could continue into the holiday season. This growth is linked to the digital creator community that rallies around products designed with them in mind, as well as a bit of retro flair. 

Headphones are always a hot gift during the holidays, and while growth may be a challenge this year, reported consumer purchase intent is up slightly – they are planning to spend a LOT more this year, likely reflecting the growth in on/around ear headband headphones. Open-ear headphones are also seeing strong growth. 

Demographic Divides Behind Shifting Spending Patterns

There is increased purchase intent among Gen Z and Baby Boomers, likely motivated by tech familiarity and productivity for Gen Z, and lifestyle enhancement for Boomers. Budget constraints are hindering interest among Millennials and Gen X. However, Millennials and Boomers remain the largest spenders, planning 15% and 11% increases in their holiday tech budgets, respectively.

Households with children emerge as a crucial holiday market segment, with twice the likelihood of purchasing tech gifts than those without children. Children’s preferences have a considerable influence on family purchasing decisions, and this trend is supported by technology’s growing role in the education and social lives of digital native children.

Economic and Political Activity Create Consumer Distraction

Value sensitivity has become a dominant theme in consumer technology purchase decision-making. Overall, 64% of shoppers plan to modify spending habits to achieve savings, and 44% anticipate reduced tech spending compared to last year. Price sensitivity will drive more thorough comparison shopping and promotion response as consumers focus on getting quality and capability at an affordable price point.

The upcoming election adds another layer of complexity to the holiday shopping season. One-third of consumers report election outcomes will influence their spending decisions. Purchase timing may shift to after the election results are available. Consumers may opt to buy in advance of new trade policies, which could impact availability and price for some products. Overall spending levels could fluctuate depending on the post-election consumer confidence swing, positive or negative.

Retailers and Brands Need to Hone In on What Matters Most to Consumers

Consumers are approaching tech purchases with sophistication. They are doing more thorough research before making purchasing decisions, and social media is playing a greater role than retailers or product reviews. Consumers are placing greater emphasis on practical benefits over novelty features and focusing more on long-term value and device longevity.

Artificial intelligence has emerged as a decisive factor in this year’s tech purchasing decisions, with 38% of consumers citing AI capabilities as influential in their choices. This indicates a rising understanding of AI’s practical benefits among consumers. Their priorities focus on tangible improvements, like improved battery life, speed, and task completion efficiency. Despite interest, a sizeable group of consumers still have concerns about AI, which needs to be recognized and addressed by manufacturers and retailers. Circana is closely monitoring the development of AI trends and attitudes – more to come!

Marketers need to reach tech’s core, high-spending segments while still offering new consumers a path toward long-term loyalty. Demographically targeted campaigns with distinct value propositions should emphasize practical benefits of AI and education around new capabilities. Compelling bundles can boost attachment, and flexible financing options will address budget concerns around high-value categories. The challenge will be to keep high-demand categories in stock and avoiding inventory overhang, particularly around concentrated shopping periods and election-related shifts.

Holiday Signs of What Lies Ahead

Circana is expecting growth in consumer tech beyond this holiday season, for the next several years. This holiday season will be an important signpost in the tech recovery cycle, a benchmark to judge how consumers are feeling about their current products. Value is not just linked to low prices but must also feature high product quality that delivers meaningful benefits to the buyer. Consumers are still feeling the fiscal pinch but are ready to pay for innovative products with good features and quality at a fair price. 

Three cheers to a happy and healthy start to the holiday shopping season ahead!