Smart devices are eating the accessible watches market

Key takeaways:

• While luxury’s moat remains, watchmakers have struggled to build hype for accessibly priced timepieces as consumers increasingly abandon them for smart devices.

• Popular upstart brands like Mvmt and Daniel Wellington signal that success in this price category is possible with the right marketing.

• Brands need to focus on their history and heritage: reissues of iconic watches like the original G-Shock have performed well with consumers.

Watchmakers need to rebrand if they want to save the sub-£500 market.

A drop in demand for cheaper watches is causing trouble for Switzerland’s manufacturing base and Swiss watch companies specialising in watches under £500. Since 2015, the number of Swiss watches being exported has declined by a third, per the Federation of the Swiss Watch Industry, and most of that shrinkage has been in watches that cost under 200 CHF (£164). Exports are approaching the lows seen in the mid-1980s when Japanese quartz technology brought a raft of cheaper competitors for established brands.

While demand for Swiss watches has been hit hard by coronavirus and Hong Kong protests, the luxury end of the market has still performed well over the past couple of years. The value of exports in 2019 was 20 million Swiss Francs, the highest since the Chinese anti-extravagance campaign crackdown began eating into sales in 2014.

The low-end of the market has been more vulnerable.

In 2015, the same year exports declined, Apple launched the first iteration of its smartwatch. Its latest versions now range from £399 to £1,399, and similarly priced watches have suffered. Mintel has reported significant declines in sales of sub-£500 watches in the UK, while NPD has recorded double-digit decreases in affordable timepieces in the US over the past year. “They’re absolutely getting cannibalised by smartwatches,” says NPD industry analyst Reginald Brack.

Where affordable watch brands have found success is in the direct-to-consumer space. Mvmt, Daniel Wellington and Uniform Wares have effectively combined minimalist design, premium branding and collaborations with influencers into modern strategies. Beyond the attractive price point, the product isn’t drastically differentiated. Instead, they rely on brand identity to attract customers.

Embrace heritage, or pivot to premium

Facing a changing market, watch brands reliant on the accessible price category can either find new ways to position their products — picking up on the history of pieces to spin marketing stories — or pivot products to sit more squarely in the premium category.

Casio’s affordably priced G-Shock, a product initially designed for pilots and renowned for its durability, was key to a strong performance for the Japanese manufacturer’s timepieces segment last year. The group singled out an all-metal version of the watch, known as the GMW-B5000. (which retails for £450), in its annual financial report. “Certain brands over the last two or three years have been able to reach back into their rich archives and retell this story of why that watch was used for that specific purpose,” says Brack.