HomeAI & CloudThere's nothing artificial about the impact of AI in 2024

There’s nothing artificial about the impact of AI in 2024

The South African Tech and Durable Goods sector is a fast moving beast of a market that demands constant analysis and data insight. To make sense of this rapidly evolving sector GfK – an NIQ company, has conducted an in-depth analysis of the market performance in 2023 and how this is translating into key trends in 2024.

What has emerged is a clear indication of a sales surge experienced in this sector in the final quarter of 2023, marking a departure from the preceding months that were characterised by subdued consumer spending. NIQ South Africa MD Zak Haeri reports; “In the final quarter of 2023, the sector witnessed remarkable growth, propelled by key drivers such as large appliances, including fridges and washing machines, alongside smartphones. Despite certain sectors experiencing declines in unit sales, overall market revenue saw an upswing due to increased average selling prices.”

In terms of key segments, the Consumer Electronics sector experienced single-digit value growth in Q4 ’23 versus Q4 ’22, driven by gaming consoles and new market entrants. Television sales declined due to lower purchasing power, while audio systems soared by double digits compared to 2022.

The larger home appliances market remained stagnant throughout 2023 compared to the previous year, with products like air conditioners retaining the majority market share, while top loader washing machines and gas-fuelled stove hobs witnessed an uptick in sales.

Despite the Small Domestic Appliances market becoming saturated post-pandemic, consumers of these products have displayed a growing preference for online shopping, with internet sales displaying resilience amid declines in traditional retail channels.

The China factor

Interestingly, the number of smartphones sold experienced a marginal decline of 3.4%, but there was a 2.9% increase in sales value attributable to rising smartphone prices. Haeri reveals that a notable trend observed during this period was the increased presence of Chinese brands in the market, particularly in smartphones and consumer electronics like televisions. This shift towards more affordably priced products aligns with consumer preferences, driving market share gains for Chinese manufacturers.

In terms of overall shopper behaviour in 2023 Haeri says, “It’s intriguing to note how consumer behaviour shifted, with many choosing to delay significant purchases until the end of the year, particularly during the Black Friday period. “This shift towards end-of-year spending was further amplified by the dominance of online sales, outperforming traditional retail channels as the festive season approached. The convenience of online shopping, coupled with a desire to avoid crowds and time off from work, propelled this trend forward,” he adds.

Are apps still smart for phones?

Looking at how the tech and durables sector will evolve in 2024, Haeri says globally the concept of an app-free, AI-driven smartphone has emerged as a potential game-changer and its potential to revolutionise smartphone technology and render traditional apps obsolete. Haeri points out that this stems from the fact that the sector is primed for the next generation of smartphones and a big question now is what it will take to leapfrog this sector to its next era in form and function.

He explains; “While the launch of the iPhone revolutionised the smartphone landscape, subsequent iterations have largely adhered to similar form and functionality. Many eyes are therefore turning to AI as a potential catalyst for innovation. The potential of AI to reshape smartphone interfaces and user experiences is vast.”

Brands like Samsung have already begun exploring AI-enabled operating systems, paving the way for new possibilities in smartphone technology. Startups like Rabbit Inc. are also making waves with AI-driven hardware solutions, offering alternatives to traditional app-based operating systems.

Haeri surmises; “The rapid adoption of AI-driven technologies, exemplified by Chat GPT’s exponential growth, underscores the appetite for innovation in this space. AI represents a paradigm shift in how we interact with smartphones, offering a seamless and intuitive experience that has the potential to transcend traditional app-based interactions.”