Consumer Electronics and Home Appliances: Key Challenges in Digital Customer Experience for 2021
6min read - iAdvize
Rapid transformation driven by the health crisis will result in winners and losers when it comes to retail and brand success. The consumer electronics and household appliances sectors are clearly among the winners, boosted by the remarkable growth of online sales in France: (+15% in one year) according to the FEVAD (Federation of e-commerce and distance selling). Globally, the online market for consumer electronics is expected to grow at a compound annual growth rate of 10.7% for 2021.
How are these sectors adapting to the crisis and the post-COVID 19 "new normal"? What are they working on in terms of customer experience? Although the current context is to their advantage, the consumer electronics and household appliances markets are facing serious challenges around changing digital uses.
This article is part of a content series dedicated to the consumer electronics & home appliances sectors. It's an opportunity to explore market trends in these rapidly evolving sectors. Here is an overview of the upcoming content:
- An infographic on the Consumer Electronics & Home Appliances market (at the bottom of this page)
- A Conversational Maturity Index (CMI) rankings for brands and retailers offering the best conversational experience in the sectors
- Case studies from our clients in the Electronics & Appliance sectors, namely Samsung US and Fnac Darty
Innovation is Part of the Consumer Electronics and Household Appliance DNA
Electronics and household appliance companies are inherently innovative, as they provide technical solutions to consumers’ many problems and wishes. From the 1950s magic blender to intelligent vacuums, all the way to facial-recognition enabled smartphones in 2020, brands and retailers in these sectors are revolutionizing consumers' daily lives. In this innovation race, it is essential to anticipate market changes to avoid falling behind.
Meanwhile, the digitalization of lifestyles has disrupted these sectors’ traditional distribution channels: in 2021, 63% of global sales in the consumer electronics sector will happen online (Digital Go to Market Review, Consumer Electronics, 2021, Forrester). Since their core businesses relate directly to technology, these sectors have a comparative advantage to exploit in this digital transition. Nevertheless, their environment is highly competitive. The industry’s landscape is evolving rapidly, as are consumers’ wishes. In particular, consumers expect brands to offer a customer experience that is as innovative as their products.
Companies are increasingly identifying digital customer experience optimization as essential; in a Harvard Business Review report, 40% of respondents said they were making the customer experience a priority in their digital transformation. This transformation is a major challenge for 2021 and for the years to come. Brands’ and retailers’ ability to offer personalized, educational and authentic customer experiences represent a real opportunity to stand out and succeed.
2020, the Year of Records
The year 2020 certainly has been marked by the public health crisis, yet undeniably some sectors have grown substantially during this period. According to a report by the Banque de France, household appliances and consumer electronics were already recording +13.6% and +13.7% growth, respectively, in September 2020 compared to a year prior. The least we can say is that the trend has kept up in 2021. The role of e-commerce in this growth is significant. However, beyond the explosion of online shopping, it is the disruption in the daily lives of the French that has boosted sales in these sectors. As a matter of fact, the successive confinements have been particularly profitable for consumer electronics and household appliances because they have created or stimulated equipment needs.
Telecommuting has been adopted on a wide scale. People have found themselves working from their homes, which were under-equipped for this new office function. Consumers chose headsets to make video conferencing a little less painful, or they purchased screens or printers. Once their workday was over and they were confined to their homes, they wanted to relax. For example, according to Content Square's analysis, video game consoles were among the most popular products in France during confinement. In fact, this holds true globally to this day, with video game hardware spending up 81% during the first year of the pandemic.
Many consumers also wanted to improve their daily environment, even if it meant staying home: making their home a sweeter home. As an example, we are reminded of the homemade bread trend that boosted the sale of bread machines. Combined with health food trends and other cooking shows, the return to homemade has driven the household appliances sector’s success. According to Deloitte, consumers increased their spending on durable household equipment by 5.7% in 2020.
This year, the French went on fewer vacations, and they spent part of their available savings to feel better at home. By renewing some of their household appliances, they were able to treat themselves.
Matthieu Nevicato, Household Appliance Marketing Manager, in an interview for Côté Maison
Finally, we must not forget consumers’ main priority throughout the crisis, which has been their health. As they were mindful of the need to stay safe, many French people equipped their homes with the latest generation of vacuums or air purifiers.
Physical store sales slumped through lockdowns, and the appearance of new online brands and retailers in the market further raised already high bars for customer service and experience. New demands for advice on technically complex products and customer support outside of office hours were of particular importance.
Emotion at the Heart of Omnichannel Customer Relations
Few sectors are as concerned by the challenges of omnichannel strategies as those of consumer electronics and household appliances. Faced with a wide range of products and high-tech items, consumers have become accustomed to comparing offers on multiple platforms and going back and forth between the web and physical stores to find the product that best meets their needs. Physical and digital stores are no longer opposed. The biggest brands and retailers in these industries have long bridged the gap between in-store and online customer journeys.
In fact, market leaders are performing well by curating both the physical and digital customer experience and even following consumer habits in supporting hybrid customer journeys. This is called the phygital customer journey, the ultimate omnichannel experience. The idea is to offer a seamless customer experience, regardless of the point of contact with the company. It's about offering the customer the best of both worlds at any stage and place during their journey. This trend is all the more relevant since the recent health crisis has pushed players to reinvent their physical sales strategies. An example, by promoting click and collect to adapt to store closures.
The consumer electronics and household appliance sectors offer products that are both technically complex and emotionally charged. They are increasingly connected and integrate more technologies such as artificial intelligence. But, they also generate genuine communities of enthusiasts. Smartphones, video game systems, multi-function food processors; many of these objects are part of consumers’ daily lives and sometimes become indispensable. Consumers then become the best ambassadors for these products. Or their worst detractor.
The customer's main tool in their choice? Product ratings and comments. In a Salsify study, 62% of respondents said they read at least five reviews before purchasing any consumer electronics. One bad review on a platform can put the entire sales channel in danger of drying up. Of course, companies can't change product reviews, but they can directly act on the digital customer experience lever to gain buyer trust and prevent a sub-par experience. To do this, more and more brands are betting on a conversational strategy.
Towards a conversational customer experience
What is a conversational strategy? First, it requires the awareness of the gap between consumers' expectations and what brands actually offer in terms of digital experience. Simply put, it has become very natural for consumers to chat directly with their loved ones via different messaging applications without delay or constraint. On the other hand, contacting brands remains very difficult and is marked by interminable waits and minimal personalization. Today's consumers want to interact directly with brands and retailers. This trend is driven by the youngest generations, Gen Z and Millennials alike, with 83% of them in favor of digital conversations with brands, according to a September 2020 Forrester study for Google.
Another challenge as consumers are starting to spend more, is the shortage in semi-conductor components, essential for these sectors. High demand coupled with lockdowns, the limited number of suppliers and other market factors are contributing to shortages that are difficult to manage. This is directly affecting consumers, who demand an unprecedented level of transparency, and constant communication wit brands and retailers.
Several solutions exist to reduce this gap. With regards to the issues mentioned above, it is a matter of building the right conditions to engage with the customer. Is the consumer looking everywhere for arguments in favor of the product they want? In that case, it's a matter of being present via as many channels as possible, including via messaging: Facebook Messenger, WhatsApp, or by chat on the e-commerce site. Omnichannelity is a real challenge for these sectors with multiple contact points.
Messaging also allows for optimal support throughout the customer journey. In the pre-sales phase, personalized advice helps guide them, thereby avoiding disappointment that could lead to a negative rating. In the after-sales phase, it is a matter of taking care of the customer relationship by providing clear information and being responsive. Adopting a conversational strategy means rethinking your digital customer relations from A to Z, providing answers that are a source of differentiation. Let’s not forget that 40% of the global market is currently not equipped with messaging and, the remaining 60% only offer 1st generation chat (iAdvize internal study, Q2 2021). In short, conversational communication is the watchword for brands and retailers in the consumer electronics and household appliance industries in 2021.
As Forbes announced in 2018:
Economic and technological changes have reshaped the buying journey. What was once purely transactional is now about relationship building. Each step of that journey - whether online or physical - focuses on strategies to improve consumer engagement in ways that deepen that relationship.
So to turn the tide in 2021, the consumer electronics and appliance industries will need to keep innovation as their compass and conversational customer experience as their horizon.