If you take timekeeping wristwear as a whole, the American market grew by a healthy 13% in 2018. But the picture is complicated by the rise of smartwatches, which are grabbing market share from traditional watch brands at similar sub-$500 price points. The fact that more people are wearing a timepiece overall should be good news for the industry, but retailers and brands need to adapt fast to changing consumer behavior as Reginald Brack, Industry Analyst, Watches and Luxury, The NPD Group, describes in this tale of two markets.
The US wholesale watch market’s performance in 2018 tells two very different stories. When we include smartwatches in the universe, the market shows healthy growth overall, up 13%, with smartwatches growing 54%. When we shift gears and focus on the traditional watch market, the category lost $268 million in MSRP dollars in 2018, translating to a 4% sales decline.
As the watch market is now made up of two differing segments, it is more critical than ever to understand the ways the traditional watch can not only survive, but thrive in this dynamic new marketplace.
The good news is that smartwatch buyers have not cannibalized the traditional watch market; in fact, many are new watch wearers.
In 2019, an estimated 10% of U.S. adults will own a smartwatch, which equates to about 30 million people. Among recent smartwatch buyers, less than one-in-five report their smartwatch replaced a traditional watch.
This is a re-invigoration the watch market has been hungry for. Within the otherwise challenged traditional watch market, there are several bright spots that warrant attention.
From a product perspective, there are specific segments that uncover a range of existing opportunities for our industry. There is a base of stability at either end of the market, among the $300-$999 price band, as well as watches priced $25,000 and above.
These two segments represent a third of the traditional market. There is spending happening in the women’s segment, which represents approximately 30% of the traditional watch market.
Despite overall declines of 7% last year, women’s watches priced over $5,000 grew 4%.
Rose gold is also proving to be a highlight, with 30% growth compared to 2017.
Key retail channels are revealing growth opportunity as well. The independent, department store, and jewelry chain channels all took overall sales hits in 2018, but the average price increased by 8% or more in each.
Cannibalization is happening at the low end, but smart brands finding a way to resonate with consumers and drive growth. The combination of brand equity and making a unique connection with the consumer adds meaning and value to the traditional watch purchase – continuing its role as mainstay category.