Watches in South Africa

2021 DEVELOPMENTS

Consumers increasingly price sensitive, while lifestyles result in digital watches presenting analogue and mechanical watches with competition in 2021

Similar to the jewellery category, watch sales are impacted by decreased consumer spending thanks to consumers’ price sensitivity and eschewing of non-essential items. Consumers’ disposable incomes have decreased at the end of the review period in the face of uncertain economic conditions, low GDP growth, the increased cost of living, social and political instabilities as well as declining consumer confidence.

Brands remains a significant factor in watch purchases in 2021

The significance of style and design of watches in the fashion space have given products in the watch category value and consumers an appreciation of their beauty beyond their functionality, as mentioned above. Previously, value was attached to the brand name, and this has not changed much over the years.

The Swatch Group retains leadership of watches in 2020 with wide portfolio, but Rolex increases value share

The Swatch Group (South Africa) (Pty) Ltd retained its overall lead of watches in 2020, a fairly fragmented competitive landscape, due to its lead of mechanical watches and quartz analogue watches with a wide range of price points including brands that are available in basic, mid and high watches for men and women. The company’s well-known basic quartz analogue watch Swatch continues to appeal to lower- to mid-income consumers and is the leading brand within overall watches, although the brand lost value share in 2020.

PROSPECTS AND OPPORTUNITIES

Watches set to see negative sales growth over the forecast period as many local consumers prioritise spending despite watch prices remaining fixed

Watches is predicted to record decreased constant retail value sales growth over the course of the forecast period, although the decline in sales is expected to slowly decelerate. Many local consumers will continue to prioritise their spending in the wake of economic instability, already impacting the country prior to the emergence of COVID-19 and the ensuing lockdown measures, making watches a non-essential purchase, certainly in the first half of the forecast period.

Consumers increasingly concerned with environmental impact and sustainability of watch industry

Similar to the jewellery industry, watch manufacturers are also taking a keen interest in the environmental impact that production of watches has as consumers are becoming increasingly concerned regarding such matrices. Many watch manufacturing companies track and publish their environmental performance with regards to factors such as carbon dioxide emissions, the water and energy consumed during the manufacturing process as well as the amount of packaging that is used.

E-commerce likely to rise with substantial space for growth over the forecast period

Despite the e-commerce channel seeing retail value sales growth over the review period, the channel’s sales growth exploded in 2020 as many consumers avoided brick-and-mortar stores to avoid contracting COVID-19, taking value share from the main channel, jewellery and watch specialist retailers. However, e-commerce’s value share will decline again in 2021 with jewellery and watch specialist retailers taking back some of its value share.