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Apple taking a bigger bite of watch market than many expected

The electronics device innovator's Watch was predicted to have some impact on the traditional timepiece-making market, but the actual bite may surprise most industry watchers.

August 10, 2015 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

Retail industry competition rarely subsides yet in most situations — such as when a new vendor appears on the horizon or a tenured veteran delivers on a new technology — the fallout doesn’t typically equate to a huge pain point for any specific competitor.

But then again, in the particular case I’m focusing on the rival in play is Apple, the retail segment is the fitness wearable industry, and together that combines for a unique scenario given the electronic leader’s successful retail product and marketing strategies.

For over a year, both the wearables and watch marketplaces were nearly holding their collective breath as Apple prepped its much-hyped and heralded watch device. The device’s arrival was akin to any other Apple product and clearly reflected Apple’s interest in the burgeoning and promising mobile health-and-fitness segment.

And, yes, consumers flocked, the media hawked and the event hogged much of the tech news spotlight for a substantial time. First came the previews, then analysis of Apple’s slightly whacky marketing strategy (letting consumers in to take a peek but not selling during the public demo timeframe) and eventually it began shipping.

The watch’s top-end option grabbed a fair share of headlines for its price — $10,000 is a lot of money to most people, even Apple fans, and there was a smattering of stories regarding the watch industry’s response to the Apple Watch. Initially the big watch players were clearly dismissive of the watch market's impact, but few, if any, dismissed the technology aspect and even seemed semi-impressed by the design.

It seemed clear that the watch industry wasn’t worried about Apple Watch — at least not as worried as the car industry seems to be regarding Apple’s interest in developing a tech-hefty, driverless automobile. The car guys, as cited in media reports, are a bit wary about how and where Apple hopes to push into car technology and may be realizing they should have been working on car tech development more than a few years ago.

But let’s not digress, as it’s easy to do when evaluating Apple’s potential to disrupt new and old markets.

And that’s exactly what Apple has achieved in the watch industry — a major disruption given a new report Monday revealing how U.S. watch sales are tanking at this point, and more than a few fingers are pointing toward Apple Watch as the culprit.

An Orlando Business Journalreport noted that watch retail sales suffered the biggest decline in seven years, citing NPD Group data published at Bloomberg. In June, watch retailers sold $375 million in product, an 11-percent dip compared to a year ago.

Sales of watches in lower price ranges (Apple’s cheapest watch starts at about $350), are doing worse, with those costing less than a $1,000 expected to incur the largest sales drop moving forward. Watches in the $100-$150 range experienced a 24-percent decline in June.

And apparently the dip is the start of what may be a steady downward move.

"The Apple Watch is going to gain a significant amount of penetration," NPD Luxury Division Leader Fred Levin told Bloomberg. "The first couple of years will be difficult for watches in fashion categories."

That’s likely putting it a bit mildly.

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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