Smartwatch sales could cannibalize sales of other watches -- including sport watches and traditional watches -- by 2020, according to a report from Mintel.
Currently only one in 20 Americans (6%) owns a smartwatch. But demand for the gadgets is on the uptick with one in four (24%) U.S. consumers buying a watch in the past year.
There is “significant potential” for the smartwatch sector, as one in five (21%) 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%) men ages 18-34, according to the report. Watch sales are estimated to reach $9.5 billion in 2015, gaining 2% over 2014. With an estimated growth rate of about 4% year-over-year (YOY), the market is expected to reach $11.5 billion by 2020.
Consumers purchase jewelry and/or watches to treat themselves more than any other reason, and they shop for these items from a number of different places, says Diana Smith, senior research analyst, retail and apparel at Mintel.
Mintel’s survey data reveals that the same percentage of jewelry/watch buyers who purchased their items from jewelry stores like Jared or Kay Jewelers also purchased from jewelry departments within other retail store types.
“Purchase rates from jewelry stores were identical to those from jewelry departments, indicating the level of competition traditional jewelers face,” Smith tells Marketing Daily. “They are in a prime position to extend this notion of ‘treating oneself’ even further by creating VIP experiences in-store and online. This could include offering educational classes, allowing consumers options to customize their items, or extending special deals in return for loyalty.”
A growing number of consumers are turning to online channels to research or purchase as well, which means retailers should be considering ways to make shopping via this channel as personal as possible, she adds.
“Options could include offering live chat assistance or a personal shopper who will help make suggestions for gifts or help to pair jewelry with outfits, or vice versa,” Smith says.
Some 13% of watch-buying consumers purchased a watch to advance technological capabilities, while 9% bought one for a specific reason (e.g. diving or running). Today, nearly one in five men (16%) uses a sport or smartwatch to compete with friends when exercising, rising to three in 10 (29%) women.
“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,” Smith says.