Inspect a gadget

The consumer electronics market continues to grow, with purchases rising 7% globally during the last year.

But is the future of this sector online, or does physical retail still have a role to play?

This growth in sales has inevitably been driven by lockdowns creating an increased need for equipment for remote working and schooling, as well as consumers buying new tech to better cope with the restrictions imposed by the pandemic.

Large screen TVs, gaming and smart tech have seen particularly strong growth. The pandemic also further exacerbated the already strong e-commerce presence within the category, with 73% of UK electronic sales taking place online compared to 55% in 2019. 

Purchasing decision
Consumers are now doing more research and taking more time to buy. According to data from Google, the average tech shopper now uses more than 14 sources of information to arrive at their purchasing decision, increasing to 21 sources for younger shoppers. These largely composed of product reviews, which consumers use to make sense of technical specifications. Also, more than half of consumers take over a month to make their purchasing decision, with this being the case for both high and low-cost goods.

This trend was compounded during the pandemic with 84% of shoppers using online sources to inform their technology purchases compared to 76% in 2019. A large part of this growth came from those aged over 45, with 80% doing online research prior to purchase compared to 68% seen the year prior.

The role of the store
Despite this growing shift towards online, Currys PC World, the UK's second largest electronic retailer after Amazon, are adamant that the future of the category lies in an online/offline hybrid. This sentiment is not without merit as prior to the pandemic 72% of shoppers went to a store to examine a product with intentions of making their purchasing online, and conversely, 77% of shoppers researched products prior to purchasing within a store. Additionally, the most influential impetus for a consumer to purchase a new technology product still comes from trying the product within a store.

The challenge in sustaining an online/offline hybrid is the cost of maintaining a physical presence as sales increasingly shift online. Dixons Carphone - the parent brand to Currys PC World and Carphone Warehouse – closed all standalone Carphone Warehouse stores in April of last year and merged these into their twenty times larger Currys PC World stores. Similarly, John Lewis has cut their number of stores from 51 to 34 since the pandemic struck and are trialling condensed John Lewis zones within Waitrose stores. Both agree that expert in-store advice will continue to play a large role in technology purchases, but the dynamic requires detailed understanding of the customer purchase journey to validate the benefit of physical space.

Due to the long purchase cycle time seen for electronic goods, price competition is high and margins for electronic retailers are often quite slim, further diminishing the budget available to sustain physical space. Both the Currys PC World and John Lewis models have their benefits – large out of town space is comparably cheap, allowing for a critical mass of product to be displayed and stores often act as a fulfilment hub to serve the wider catchment.

However, with convenience ranking as the key factor in choosing a purchase channel, smaller stores in high footfall locations, such as supermarkets, provide convenient locations both for consumers to gain a sensory experience of new products and the execution of click and collect orders. This is driving brand engagement and presenting a more unified omnichannel presence.

Bikram Sandhu