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Traditional Watch Sales Suffer Large Drop in June - Are Smartwatches to Blame?
Wearable Tech World Feature Article
August 12, 2015
Traditional Watch Sales Suffer Large Drop in June - Are Smartwatches to Blame?
By Christopher Mohr
TMCnet Contributing Writer

According to NPD Group (News - Alert), a jewelry industry research firm, sales of traditional watches in June totaled $375 million in the U.S., an 11 percent drop from June 2014 sales totals. It represents the largest such decline since the financial crisis of 2008.

The popularity of the Apple (News - Alert) Watch and interest in related technology events like the Wearable Tech Expo seem to spell doom for traditional watches. The knee-jerk reaction would be to place all the blame on the Apple Watch for reduced traditional watch sales, but a closer look at the data shows that the sales of wearable devices are probably not the only reason. Sales of timepieces in the $100 to $149 range were off 24 percent from their June 2014 totals.

This range had the greatest drop in sales and is conceivably one of the larger, if not the largest, group in terms of number of customers. These folks are unlikely to purchase Apple Watches, which according to Bloomberg (News - Alert) Business, range from $349 on the low end to $17,000 for an 18-karat gold version on the high end.

Fred Levin, head of NPD’s luxury division acknowledged that the Apple Watch was a factor, it just wasn’t the only one. He cited a shift in retail promotional calendars and a decline in licensed fashion brand sales as additional factors and stated that consumers who did not previously wear watches at all were among those who bought Apple Watches. An overall decline in specialty jewelry sales shows that the public is not buying jewelry in general, and is not necessarily singling out traditional watches.

So are non-Apple smartwatches responsible? It seems unlikely. Strategy Analytics (News - Alert) estimated global smartwatch sales to be 5.3 million units in 2Q 2015, with Apple Watches making up three-fourths of the total, or about 4.0 million units. According to Slice Intelligence, a little over three million units were sold in the U.S. between April 10, when pre-orders started, and July 10, the three-month-anniversary. This is an average of one million units per month. Apple seems to dominate the smartwatch market enough that its competitors would have little effect on hurting traditional watch sales.

The same report shows that Apple Watch sales in June in the U.S. dropped to 10,000 units per day or a total of 300,000 watches for the month. This is well below the one million units per month average, and demonstrates that sales for Apple Watches have slowed dramatically from the April pre-order period. Furthermore, unit sales for traditional watches were over three times greater than the Apple Watch, totaling about 927,500, according to NPD.

So what can we conclude from these results? It’s likely that the Apple Watch is taking a bite out of traditional watch sales, but the data does not indicate that the traditional watch industry is dead. It appears that there are differences between traditional watch and smartwatch customers, making it unlikely that a mass exodus from the former group to the latter group is going to happen anytime soon.

Hear more about the future of smartwatches and wearables next week in Las Vegas at the Wearable Tech Expo.

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Edited by Stefania Viscusi

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