Luxury Portable Consumer Electronics in Russia

PROSPECTS

Luxury mobile phones will remain negligible due to advances in technology and premium models offered by smartphones

Sales of luxury portable consumer electronics in Russia continued to be comprised of luxury wearables following the exit of luxury mobile phones at the end of 2017, following Vertu’s bankruptcy. With the continual development by smartphones in terms of their technical capabilities and the premium segment offering greater luxury such as iPhone options with gold and diamonds, Russians were attracted to devices that also offered specific functionality.

Luxury wearables predicted to recover over forecast period as consumer base expands to include affluent younger generation

Despite ongoing declining demand in Russia at the end of the review period, luxury wearables is predicted to recover over the forecast period with the category set to record double-digit growth in both current value and retail volume terms. Initially growing from a low sales base after its entry to Russia in 2015 due to its extremely high average unit price, the category has stronger potential, driven by the growing interest in health and fitness trends, as an increasing number of Russians, particularly the younger generation, begin to incorporate luxury wearables into their lifestyles.

Luxury wearables unlikely to pose threat to demand for luxury timepieces or smartphones

While many regular consumers are content to use their smartphones for a multitude of functions including keeping the time, downloading fitness apps and accessing emails, affluent consumers are more likely to indulge in separate devices for specific roles. Therefore, luxury wearables is unlikely to become a competitor to smartphones or luxury timepieces in Russia, particularly in the short term.

COMPETITIVE LANDSCAPE

Consolidation for leading luxury wearables brands

Despite initially being a highly fragmented competitive landscape, luxury wearables witnessed strong consolidation in 2018, with smaller players losing value share to leader Citizen Watch Co Ltd, now dominating the category with its brand Frederique Constant. However, its nearest competitors Apple Inc (Apple Watch Hermès) and TAG Heuer also gained ground and recorded stronger current value growth.

New launches for Apple Watch Hermès likely to lead to further share gain

The collaboration of the French fashion house Hermès and American company Apple developed a new model under the Apple Watch Hermès brand, with the Apple Watch Hermès 5 which was launched in September 2019, and is supported by its retail through both selected Hermès boutiques and Apple stores in Russia. The dial of the new model in the Dark Art version is completely black as is the casing and the strap.

Stronger potential of luxury wearables could still see other luxury goods players enter category over the forecast period

Despite consolidation within luxury wearables in 2018 which saw the exit of smaller players under “others”, other more high-end global brands may be tempted to enter this niche in Russia over the forecast period due to the category’s potential for further growth. With an expanding consumer base of affluent younger consumers in the country who like to follow global fitness and the latest fashion trends, the category will benefit from their search for luxury goods that offer them a personalised approach in addition to owning exclusive products that offer specific value.

Files are delivered directly into your account within a few minutes of purchase.