Spending on electrical fell by 7% as the market reacted to the impact of COVID-19 disruption in 2020, thereby ending five years of consecutive growth. This decline was underpinned by: the sharp decline in sales in April and May, in both household appliances (-21.6% and -10.2%) and computers and telecoms (-69.3% and -64.2%), respectively; continued decline in the latter throughout the course of the year; and a growing polarisation of demand within the marketplace.

These conditions combined to contract the market, even amid the surge of new opportunities since the outbreak in March. Much of this resulted from extended periods inside, and the rise of flexible living, as sales surged with the rise of home-cooking, baking, mounting interest in wellbeing, the shift to increased childcare and working from home, and more broadly from increased wear and tear, and the renewed focus on capacity and performance.

Moving forward, the prioritisation of the home amid extended periods inside, redirection of demand online and the polarisation of demand within the marketplace, are set to remain, not least given the third national lockdown in January 2021. However, the past year will also hold longer-lasting implications. Perhaps the most stark legacy from this will be in the surge of online penetration, with a net-long-term benefit for the channel in the past year, although this will also raise questions for multichannel players, both in-store and online, in coming years.

Ongoing disruption will maintain the polarisation of demand, with the unequal impact of this fallout disproportionately hitting less affluent consumers. However, alongside denting total expenditure, this polarisation will offer new opportunities to electrical goods retailers. At the lower end of this split, the introduction of more savvy shopping behaviours will open up opportunities for more circular business models, such as in-store exchanges and second-hand ranges, while at the other end, the upscaling of purchases, buoyed by that money redirected from other non-essential sectors, the housing market and increased uptake of major renovations will open avenues for more premium goods and retailers at the higher end of the marketplace.

Key issues covered in this Report

  • The impact of COVID-19 for spending on the electricals.

  • How this disruption will change demand in the short, medium and long term.

  • Opportunities for retailers amid this disruption and extended periods inside.

  • The future of the purchasing journey and the growing role of online-only retailers.

  • How multichannel retailers, and particularly specialists, can boost market share, and revive the role of the store moving forward.

  • The opportunity for wellbeing and sustainability in the market.

  • Technological innovations to bridge the gap between multichannel retailers and housebound consumers.

  • The opportunity for increased engagement on mobile apps.

COVID-19: market context

This Report was written in January 2021.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licenced for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

Impact of the January lockdown and the vaccination roll-out

Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, Mintel had factored in the likelihood that an effective vaccine would be available from early to mid-2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZeneca vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022.

GDP isn’t expected to return to pre-COVID-19 levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

Products covered in this Report

This Report uses market and consumer research and key retailer metrics to give an overview of the UK electrical goods market. The electrical goods market is a diverse one in terms of both the products sold and the retailers that sell them. We have split the product market into four key segments, and for each we provide a market size and forecast:

  • Household appliances – Consisting of major appliances, such as refrigerators and washing machines, and small appliances such as coffee machines and kettles.

  • Audio-visual and photographic equipment – Consisting of audio-visual products such as TVs and stereo systems, and photographic equipment, such as digital cameras and projectors.

  • Computing and telecoms – Consisting of information-processing equipment such as personal computers and tablets, and telephone and telefax equipment, such as mobile and home phones.

  • Personal care appliances – Consisting of electrical appliances of personal care, such as electric razors and hairdryers.

The full range of retailers and products covered by these segments is covered in more detail in the Appendix of this Report.

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