Watches in the US

PROSPECTS

Watches returns to growth, albeit only moderately

After years of continuous declines, traditional watches saw flat sales growth in retail value sales terms in 2019 as sales of high mechanical watches lifted the overall watches category in the US. While the overall watches category continued to decline in retail volume sales terms, albeit at a slower rate than in recent years, a resurgence in the popularity of mechanical watches with high unit prices largely compensated for volume and value declines in other watches categories.

Smart watches continue to take share

Spurred by the release of the first-generation Apple Watch in April 2015, the growing popularity of smart watches, including activity watches and smart wearables, in the US continued to place downward pressure on traditional watches in 2019. Most affected were sales of quartz analogue and quartz digital watches, which saw sales at all price points fall at similar rates to recent years.

Mechanical watches rebound

While many consumers opted for timepieces with additional electronic functionality, another group turned instead to the design, tradition and brand names of mechanical watches, especially in the high end of the market. Long held as status symbols by men and women alike, mechanical watches are seeing a resurgence as the fruits of a robust economy and a desire for craftsmanship in an increasingly digital world is drawing consumers to the movement.

COMPETITIVE LANDSCAPE

Fossil Group Inc maintains the lead in watches, despite declines

With a portfolio of owned and licensed brands spanning movements and price points, Fossil Group Inc continued to lead watches in 2018, despite sales declines. As consumer interest further moved from traditional watches to smart watches, sales of the group’s traditional watches continued to fall for brands, including Armani Exchange, Emporio Armani, Diesel and Skagen.

Swiss exports drive high mechanical watches

The sales of high mechanical watches, which lifted the overall watches sales throughout 2018 and 2019, were largely dominated by luxury Swiss watchmakers, as exports of high-end Swiss watches to the US reached their highest levels in years across this period. With independent and group-owned brands like Rolex and Richemont’s Cartier, respectively, having had a strong presence on the US market for decades, a growing economy coupled with high consumer confidence drew consumers to the aspirational Swiss brands.

Internet retailing grows across categories at bricks-and-mortar’s expense

Internet retailing continued to be the fastest-growing sales channel for watches of all types as brands and retailers alike expanded online product availability and invested in improving digital storefronts and product photos. Mechanical watches saw the fastest growth in internet retailing as consumers became increasingly comfortable purchasing high-value items online, and luxury online retailers and select brands debuted new e-commerce capabilities throughout the year.

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