Luxury Portable Consumer Electronics in the United Kingdom

PROSPECTS

Vertu’s demise signals the beginning of the end for luxury mobile phones

The UK’s biggest luxury phone manufacturer went into administration in May 2017, after failed plans to save the company, which was once owned by Nokia. Given that Vertu represented a significant share of sales in luxury portable consumer electronics in 2016, the impact of its withdrawal in 2017 cannot be underestimated.

Sports continue to influence luxury goods, as luxury wearables rockets

Conversely, luxury wearables enjoyed another strong year in 2018, with double- and even triple-digit growth at the end of the review period placing wearables at the forefront of the technological arm of luxury. The vast majority of the category is comprised of smartwatches, usually with a sports or fitness element incorporated.

Consumers demand less conspicuous consumption and more convenience

Luxury goods are more accessible than ever, particularly luxury wearables. The dual functionality and inherent exclusivity offered by such products makes luxury wearables doubly desirable, and the advanced technology justifies their high price point compared with classic timepieces.

COMPETITIVE LANDSCAPE

Luxury wearables fragments as brands continue to innovate at all price points

Although luxury wearables will continue to grow at a considerable pace over the forecast period, the brand rankings are expected to shift seismically over this time as the category fragments. Smartwatches have slightly lower mark-ups than other luxury accessories, and as a hybrid between apparel/accessory/watch, prices will rarely reach the typical top-end of these three categories.

Luxury mobile phones struggles as customers eschew bling in favour of function

Gone is the high demand amongst wealthier consumers for ostentatiously decorated phones and digital watches. The onus has now shifted to craft; the life expectancy of a product now carries more or equal weight to its aesthetic.

Accessibility and availability blur the lines between luxury and mass

The ambiguous categorisation of the luxury wearables category mirrors the increasingly ambiguous status of luxury consumers. TAG Heuer, the top-ranked brand in luxury wearables in the UK in value terms in 2017, has maintained brand equity by following the manufacturing guidelines it follows for lower-priced models, to ensure quality craftsmanship.

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