New consoles, gaming notebooks and TVs will be featured in 2022

by Leda Cavalcanti

The year 2022 begins with Brazilians much more digital. Consumption moves in a hybrid format, between online and offline, all depending on the convenience itself, which has led the industry and retail to think far beyond the channel strategy. “The game now is to understand the multiple journeys of consumption”, says Henrique Mascarenhas, commercial director Latam of the research company GfK, in this interview in which he takes stock of 2021 and projects what 2022 will be like, a busy year, with presidential elections and the World Cup, for the different product categories in the electronics and appliances segment.

How does GfK evaluate the year 2021 for the electro-appliances segment?

Henrique Mascarenhas – It was another very challenging year. However, the nature of these challenges was different from those we faced in 2020, when the pandemic broke out. We need to start by talking about the consolidation of the consumer’s physical journey, which now has a greater digital baggage and has made retail and industry have to think beyond the channel strategy. The game now is to understand the multiple journeys of consumption, which are hybrid between online and offline, and centered on convenience.

“In 2022, the trend of products related to activities at home, like oil-free fryers, vacuum cleaners, cooktops and stoves, in addition to refrigerators.”

In the dynamics of the year, with the main commodities (steel, oil, copper, aluminum) on the rise, the price of international freight increased by five times and the most devalued Real exchange rate since September 2001, the industry had no option but to pass on these costs to the consumer. At the beginning of 2021, we forecast two categories of products that would consolidate in the electronics market to mitigate this rise in costs and allow consumers to have options: affordable premium and downgraded. And that’s what happened. In other words, the industry started to offer premium products that have the characteristics most sought after by the consumer, but with a simpler specification and, therefore, a lower price. On the other hand, products with the least possible characteristics were offered to obtain the lowest cost and, consequently, the lowest price at the point of sale.

How was consumer confidence?

HM – Consumer confidence fluctuated a lot, always in the field of pessimism. We even outlined a recovery towards optimism, which faded in September with the political and economic turmoil. The most impacted since the beginning of the pandemic, in March 2020, were families with an income of less than BRL 4,800.00, which are considerably more pessimistic compared to those with higher incomes. This means that consumption in classes C, D and E (approximately 80% of families) was more affected, which reinforces the need for lower-priced products.

What were the positive points?

HM – We had positive points to celebrate, such as the evolution of vaccination in 2021, which was fundamental for the consistent recovery of jobs. Even though the unemployment rate is high and average wages are lower, we see a return to services that were drastically affected in 2020, giving more dynamism to the day-to-day economy.

The various learnings that the pandemic brought to the electronics sector are also on the positive balance. The first is what we call “in-home behaviors” (@home). Homes have gained a new dimension in people’s lives, regardless of social class. These are perennial dimensions, with a long-term impact: more food at home, fun at home, work and study at home, and cleaning activities – after months of covid-19, we know that our lives will be much more hybrid between what we do inside and out of the house, all powered by connected devices. This benefits electronics, as they are the ones who make this fluid hybrid life possible.

Between 2020 and 2021, Brazil also took a leap in the use of digital as a shopping, communication and entertainment tool – especially on mobile. This trend was accelerated by the pandemic, but the lessons are learned in the long term. In 2021, approximately 50% of electronics purchases were made through e-commerce (with mobile apps playing a leading role) – until 2019 this number was below 25%. Not only did people learn to buy online, they also had good experiences. They lost their fear of digital. Retail has also changed, whether starting or expanding its sales via its own e-commerce, marketplace, via apps or even via communication apps like WhatsApp.

This digital leap made by Brazilians makes consumption physical, that is, physical and digital are allies in the purchase journey. People researched products and prices, and shopped at the places (physical or digital) that were most convenient at that time. In this current scenario, the consumer’s shopping journey is much more relevant than individual channels. The question that retail and the electronics industry will have to answer is: will my omnichannel strategy adhere to my target consumer’s imaginary journey? I like to think that 2021 was a continuation of 2020, we consolidated habits and attitudes, and started the hybrid life, as we will have to live with the new virus for longer.

“The new consoles, gaming notebooks and new titles and franchises should shake this market in 2022. Wearables are connected to the wellness and healthy living trend, which is growing year after year. Smartwatches and headphones should be some of the best bets in the industry and retail.”

What products stood out the most in 2021?

HM – The ones that stood out the most during the year were those related to our hybrid life and the new dimension of homes. Of course, the trend comes in a slowdown (after a boom in 2020), but it’s something structural. It’s our evolution towards a hybrid life of work, studies and activities inside and outside the home.

Was the premiumization trend confirmed during the year?

HM – This trend continues, however it starts to be more restricted to families with higher incomes, since those with incomes of less than R$ 5 thousand are with much lower confidence and apprehensive about their present and future. Even families with higher incomes felt the rise in electronics prices, which were above inflation measured by the IPCA. This reinforces the rise of affordable premium products, which were the most sought after because they offer the consumer the main premium features, but with more simplified specifications.

The return of premium products, super specified in the electronics lines, will depend a lot on the recovery of the salary of Brazilians, which today is at the same level we had in 2017, still after two years of recession. Another point is the possible cooling of costs, which could come through two channels: drop in input prices in the international market and the appreciation of the real. The trend of affordable premium and downgraded products, which started in mid-2020 and intensified in 2021, is expected to continue into 2022.

“Some products with lower penetration in homes are expected to show significant growth, such as Wine coolers and beer fridges, dishwashers and clothes steamers.”

Which products are expected to stand out in 2022?

HM – The trend of products related to activities at home (@home) continues, but at a much lower intensity than that seen in 2020 and 2021. This range of products includes laptops and displays, oil-free fryers, vacuum cleaners, cooktops and stoves, in addition to refrigerators. Some products with lower penetration in homes are expected to show significant growth, such as Wine coolers and beer fridges, dishwashers and clothes steamers.

We cannot forget that in 2022 we will have the World Cup. Exceptionally, it will take place in the fourth quarter, which should greatly heat up sales of televisions in the second half. The highlight will be the devices with screens above 55” and with the smart feature. Since 1998, the television market grows in the years in which this sporting event takes place.

Smartphones with screens above 5.8” will continue to gain space, as the category is essential and increasingly present in people’s lives. Finally, it is worth highlighting some products that should emerge in 2022: games and wearables. Games emerged during the pandemic, but many of the news were postponed to the end of 2021 and the beginning of 2022. The new consoles, gaming notebooks and new titles and franchises should shake this market in 2022, still restricted to a portion of the population with higher income. Wearables are connected to the wellness and healthy living trend, which is growing year after year. Smartwatches and headphones should be some of the best bets in the industry and retail.

What factors can boost consumer confidence?

HM –The fundamental factors to boost consumer confidence at this time are: recovery of employment and income, cooling of inflation and less short-term political and economic turmoil. The confidence in the exchange rate is associated with the recovery movement, which impacts various reference prices for the population, such as gas, fuel and electricity. We cannot forget that 2022 will be an election year, (first round in early October) with a World Cup only at the end of the year, along with Black Friday and Christmas.

The confidence of lower-income families is significantly lower. Reducing inequalities, especially those caused by the pandemic, will also be a major factor in improving the overall outlook. Since 2014, the Brazilian has entered the pessimistic zone and stayed there. There is still a lot to be done to bring consumer confidence back to the optimistic side. Optimism will only come when Brazilians have greater confidence in their future and feel comfortable with their present. The recovery of employment and the normalization of the pandemic will be fundamental for the reversal of this pessimistic picture of almost eight years.

Source: Eletrolar News #146