In the digital age, as electronics become increasingly complex and expensive, and more and more of the products we buy are technologically advanced, extended service contracts are growing in popularity.
A new laptop can cost hundreds or even thousands of dollars, and if it breaks down after a year or two, it could be a substantial loss for consumers. Extended service contracts provide additional protection to consumers to avoid these financial risks. Consumers are also becoming more aware that the standard factory warranty that comes with most products is often very limited in scope and time and does not cover all of the potential costs of repairs or replacements.
Today, it is increasingly rare to find major appliances that do not rely on digital technology. Refrigerators often have touchscreens which can track contents and even order food items automatically. Even base models typically control temperature and moisture levels electronically. Consumers welcome these advances but also are wary of the cost of repairs over the long term. This leads many to more seriously consider adding extended service contracts to their purchases.
In line with Centricity’s predicted retail trends, the extended service contract industry is growing rapidly as a result of the surge in the digitalization of everyday appliances. In 2022, a study conducted by BusinessWire found that the global extended service contract market topped $130.7 billion in 2022 and is expected to reach $192.9 billion by 2028.
Contributing to the digitalization of appliances, the digital age has made it easier for consumers to purchase extended service contracts. You can now buy them online or over the phone, and most retailers offer them at the point of sale. Potential buyers can even compare expected repair costs with the cost of purchasing the peace of mind from an extended service contract.
A survey from Parks Associates discovered that 42% of consumers purchased extended service contracts for major appliances in 2022. Of those surveyed, 60% of participants were more likely to choose the brand with the more extensive offerings, when given a choice between two brands that offer extended service contracts.
This is good news for companies that sell extended service contracts. It means that there is a growing market for their products, and they can expect to see increased sales in the future.
At Centricity, we take pride in staying ahead of upcoming trends and preparing our channel partners for the future of product protection. For over 47 years, Centricity has been working side-by-side with retailers to help them create customized product protection plans that fit the needs of their business and their customers, while also keeping them ahead of the curve.
To learn more about how Centricity can help your business create an effective product protection program for the digital age, contact us today or visit our website!