Sales Dropping for Michael Kors Watches
Several months ago analysts began to predict that the Apple Watch would pose a serious threat to traditional watches selling in the $300 to $500 price range. Now that prediction has come true as Michael Kors has reported a 5.8% decline in sale store sales as well as a 6.7% drop in North America.
Analysts at Barclays stated last fall that they were “increasingly concerned” about Fossil, which makes products for several brands in that target price range including Michael Kors. “We cannot overlook what is increasingly becoming a major disruption to the entire watch industry,” the analysts stated. “Future innovation at Fossil …will largely be challenged by hype and innovative offerings from deep pocket technology-credible competitors such as Apple, Samsung and Motorola.”
Even though Fossil had already announced a plan to create smartwatches with Intel, the analysts feels that the brand “faces an uphill battle to establish its credibility” in the field.
Brian Sozzi of Belus Capital Advisors expressed a similar opinion on the threat of the Apple Watch to similarly priced regular timepieces. “The versatility of the Apple Watch, as seen in its multiple straps and faces, essentially gives the consumer every watch style in the mall plus an Apple ecosystem that makes one’s life easier,” he said.
“At the price point, it’s a major threat to every watch player that dumps their timepieces inside of locked counters at the likes of Macy’s, J.C. Penney, and Nordstrom.”
So which brands are not threatened by the smartwatch invasion? According to Sozzi, the most expensive luxury brands. “For people buying [luxury] watches, it’s viewed as a long-term investment … A family heirloom in many respects. For this group, they will own an Apple Watch and a Rolex.”
Time will tell how well the makers of mid-priced watches will react to the coming of the wearable devices—and which brands will survive.