Watch Sales Plunge in June
June is a great month for graduations, weddings and summer vacations but not such a good time for watch sales. In June of 2015, sales of watches took their biggest drop in seven years—11 percent by value and 14 percent by units.
So what happened? Fred Levin, an analyst for the market research firm NPD Group, cited several reasons for the plunge in sales. One major factor was the decreased demand for high-end watches by Asian tourists.
However, the biggest drop in sales came at the lower end, with watches priced at $100 to $149 taking a 24 percent decline. Levin found three factors to blame: a drop in sales of licensed fashion brands, changes in the promotional calendars of retailers and the debut of the Apple Watch. While some of the more sensational media outlets have been quick to lay the entire blame for the falling watch sales on the Apple Watch, Levin thinks it’s more complicated than that.
“We found there were 930,000 watches sold in June,” Levin stated. “By conservative estimates, several hundred thousand Apple Watches were sold that month. If you think about how even 200,000 or 300,000 units compares to 930,000, that is extremely material. It doesn’t take a rocket scientist to realize that some level of cannibalization has occurred. That is basic math.”
Levin believes that the coming of the Apple Watch and its competitors in the smartwatch category will be beneficial to the sales of timepieces in the long run. “They may hurt in the short term,” he stated. “Like it or not, they will cannibalize the business at accessible price points as more people jump in.
“But long term, a large number of people are being introduced to the category. Many young professionals don’t wear watches. If people who never thought about wearing a watch before are turned on to putting something on their wrist, that is positive. But we have to go through the next three years first.”
For the makers of traditional timepieces, those may be very long years.