The Interplay Between Smart and Traditional Watches

Strategy Briefing

About This Report

Jun 2018

The decline of traditional watches and the explosion of smartwatches ignited a cause-effect narrative. Yet, the recovery of traditional watches, and the slowdown of wearable electronics, clearly indicates the two categories tap into different consumer groups and can easily coexist. This report analyses the interdependencies of these categories, which increasingly influence each other, as a growing number of either traditional or smart players cross the line and further blend both references.

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The Interplay Between Smart and Traditional Watches

The recovery of watches rules out the transfer theory

The decline of watches over the review period, along with the rapid growth of wearable electronics, led to many believing most consumers were just switching devices. However, the recovery of traditional watches is proving this assumption wrong, and showing a more complex relationship between the two categories.

The rapid evolution of wearable electronics

Initially designed with a clear sports-oriented positioning, wearable electronics quickly moved into fashion territory, especially after the launch of Apple Watch in2015. Ever since, the wearable electronics category has quickly evolved as a result of the entirely different DNA of key global players now operating in this space.

Smart adoption remains low despite explosive growth

As with many previous consumer electronic devices, wearable devices enjoyed sturdy initial growth, with much lower current growth rates after just a few years in the market. One of the key hurdles is the low consumer adoption (both in terms of ownership and usage) preventing these reaching mass consumer appeal.

Technology + fashion+ traditional watches players co-exist

The competitive landscape is getting increasingly sophisticated, with an incessant number of new entries from all sort of backgrounds. Technology companies, fashion houses, traditional watch manufacturers and increasingly jewellery players are now competing side by side while quickly impelling each other.

Hybrid models offer the best place to further bridge the two worlds moving forward

Hybrid smartwatches are quickly gaining traction given the combination of essential and commonly relevant functionalities and carefully thought-out aesthetics. Mimicking the looks of mechanical and quartz analogue pieces, their added functionalities at an affordable average price point makes them a clear winners, set to narrow the gap between traditional and smart players over the forecast period.

Introduction

Scope
Key findings

State of Play

“Battle for wristband space” over time
State of play
Watches back on track
Asia Pacific drives global shift
Quartz analogue and affordable pieces lead
No changes in terms of product-mix
Swiss exports encourage further optimism
Wearable electronics on their way to becoming mainstream…
…showing considerable product-mix changes over time
Consumer adoption remains low
Wide price range for a wider consumer base
Enough room for both moving forward

Co-existing Rather Than Competing

It is not a zero sum game
Largest volume drops…
…and largest volume gains rarely overlap
“Share of wrist” gets ever more crowded
Competition heats up in the mid-price segment
Hybrid models: The intersection between traditional and smart
Evolving positioning as the consumer base expands
The role of smart jewellery

Differentiation Strategies

Differentiation allows product cohabitation
Health and fitness: Activity band territory
Communication: Smart wearables lead at ease
Fashion: Mechanical, analogue displays and hybrid territory
Functionality: Digital displays at affordable price points

Challenges and Opportunities

Challenges (I): Device saturation
Challenges (II): Digital detox on the rise
Opportunities (I): Remote payments and senior health
Opportunities (II): Entry-level price points

Appendix

Data parameters and report definitions