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 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.
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.
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.
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 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.