NPD forecast reveals 5% revenue declines expected in 2022, with smaller declines to follow through 2024
According to The NPD Group, 2021 was a record setting year for the U.S. consumer technology industry with sales reaching nearly $127 billion dollars, up 9% from 2020’s tremendous results. Looking ahead through 2024, revenue declines are expected, though total sales will remain above pre-pandemic levels. NPD’s most recent Future of Tech forecast reveals year-over-year U.S. CE industry revenues are expected to decline 5% in 2022, 4% in 2023, and 1% in 2024.
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“In the near-term we are anticipating slowing demand from the extraordinary rates we have been seeing over the last two years,” said Stephen Baker, vice president and industry advisor for NPD. “With such high levels of purchasing in 2020 and 2021 driven, in many cases, by pandemic lifestyle changes, we are seeing a larger, and younger, installed base for a number of devices. This will inevitably slow consumer needs in the immediate future for technology updates and upgrades.”
A trend that began pre-pandemic but will carry into the new year is rising average selling prices (ASPs). 2022 will see the fifth consecutive year of industry level ASP increases with overall unit pricing expected to top $72, up $16 from 2018. Last year ASP increases were in part the result of growing shipping costs and component shortages, but much of that was not felt until the second half of the year. Going forward NPD expects to see selling prices remain stable at this new, higher level due to the combination of strong demand for premium solutions and softening consumer needs for lower value device categories.
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Despite the anticipated declines, NPD’s forecast indicates smart home will be an area of growth for the industry. In 2022 the category is expected to see unit growth of 6%, accompanied by 2% revenue gains, bringing total sales to over $4.1 billion. This will result from gains in security focused segments, including security cameras (up 2%), smart doorbells (up 13%), and smart locks (up 8%), as well as in segments more focused on convenience and energy savings, such as smart power (up 4%).
“Sales of smart home devices had a strong 2021 holiday season, and we are forecasting unit and dollar sales to continue growing through 2024,” said Ben Arnold, executive director and technology industry analyst for NPD. “Consumers are also focused on entertainment, which will result in sales growth for standalone VR headsets and big screen TVs (65-inches and above) through the forecast period. While VR offers a unique entertainment experience, growth in big screen TVs will continue from pre-pandemic trends towards larger screen sizes.”
Future of Tech forecasts and insights are based on forecasted sales of technology products captured in The NPD Group’s Retail Tracking Service point-of-sale data.