While just one in 20 Americans (6 percent) is lucky enough to own a smartwatch, new research from Mintel reveals that smartwatches could cannibalize sales of both traditional and sport watches by 2020. Demand for watches overall is ticking along nicely, as one in four (24 percent) US consumers has bought a watch in the past year*. However, there is significant potential for the smartwatch sector as one in five (21 percent) consumers who purchased a watch in the past 12 months say they are very interested in the smartwatch trend; this number increases to almost two in five (37 percent) men aged 18-34.

“There is a very real possibility that smartwatch sales could cannibalize sales of other watches over the next five years. This scenario assumes that the current smartwatch buzz manifests into sales that can withstand momentum as more functional apps are created, more developers launch new products and prices come down. It also assumes that sport watches continue to grow in light of consumers’ heightened interest in using them to track their fitness levels and compete against others in various forms of exercise. An ideal situation for the smartwatch sector would be one where smartwatches (and sport watches) lift the entire category, while traditional watches – which comprise the majority of total watch sales – remain at least steady,” said Diana Smith, Senior Research Analyst, Retail & Apparel at Mintel.

What’s more, further highlighting the importance of technology to today’s consumers, some 13 percent of watch buying consumers purchased a watch to advance technological capabilities while 9 percent bought one for a specific reason (e.g. diving or running). Today, nearly one in five men (16 percent) uses a sport or smartwatch to compete with friends when exercising, rising to three in 10 (29 percent) women.

“While we predict the uptake in smartwatch adoption will be high, there are barriers to mass adoption beyond early adopters, including the high price point and the reality that many consumers may already own a fitness tracker or a smartphone and therefore don’t see the need to add a smartwatch to their repertoire. However, while more men than women purchase watches overall, opportunity for smartwatch purchases lies with women who view the devices as helpful tools that can aid in managing their health,” continued Smith.

Watch sales are estimated to reach $9.5 billion in 2015, gaining 2 percent over 2014. With an estimated growth rate of about 4 percent year-over-year (YOY), the market is expected to reach $11.5 billion by 2020.

32% of older Millennial watch buyers mainly wear a watch to make a fashion statement

Finally, highlighting that time is not up for the average timepiece (i.e. those which are neither smartwatches nor sport watches), traditional watches remain a favorite among men (31 percent) and women (30 percent) alike, which makes sense given the long lifetime of most watches. Most notable, however, is that one quarter (25 percent) of watch buyers mainly wear a watch to make a fashion statement, including 32 percent of older Millennials (consumers aged 29-38).

“As the economy improves, so too should sales of watches. Consumers are becoming more comfortable spending on nonessential items and we should see more and more smartwatch curiosity convert to purchases. What’s more, watches have wide appeal across various demographics, and they are a very personal choice, enabling individuals to express their style and personality. To some, the addition of a watch makes the entire outfit. Watch retailers have the opportunity to push these accessories to the forefront, encouraging a mindset shift among shoppers: purchase the watch first to create a fashion statement, and then let the outfit become the ‘accessory.’ This type of messaging may resonate best among older Millennials, who are more engaged in the category,” concluded Smith.

*Based on the 12 months leading to June 2015

 

Press copies of the Watches and Jewelry US 2015 report and interviews with Diana Smith, Senior Research Analyst, Retail & Apparel, are available on request from the press office.

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