Children’s Wearables – The Next Big Thing?

Wearables are set to be the next big thing in consumer electronics with a projected volume growth of 29% CAGR from 2015 to 2020. From fitness enthusiasts to tech enthusiasts, wearables are gaining mainstream acceptance among consumers. Manufacturers have worked to improve the battery life and to widen the potential use cases of the wearable to appeal to consumers. It now adds an unlikely customer to its consumer demographics – children.

Households with one child

Later marriage and childbirth, higher rates of female participation in the labour force and rising living costs are just some of the reasons fuelling a smaller average household size in many developed countries. In countries where households with one child are the predominant family size, parents tend to be more protective of their only child. At a young age, children are full of curiosity and less wary of people and their surroundings. This makes it a challenge for parents to always keep an eye on their child, especially when they are at work. For parents and in particular, households with a single child, knowing their child is safe is a key concern.

Wearables over smartphones for children

Many manufacturers have identified this opportunity to launch wearable devices targeted at children. China is one of the early adopters as manufacturers leverage on the large pool of single child households. Local companies such as Xiaomi Inc, Qihoo 360 Technology Co. Ltd and XTC, a subsidiary of BBK Electronics, have all launched their own children’s wearables. The functionalities of these wearables are fairly similar, for example, two way calls can be made to a select number of people. Parents are also be able to track the location of their child through GPS.

childrens-wearables

Source: Euromonitor International

As compared to a smartphone, the potential for wearables for children is greater, especially when the child is younger than 12-years-old. The device is always worn, its features are simpler to use, and abductors might mistake it for a regular watch. This also addresses the issue of smartphones being banned from numerous schools due to concerns over thefts and to prevent students being distracted.

In terms of price, the Y01 from XTC which is priced higher than other brands at ¥798 (US$123) is still half the average price of a smartphone. With Xiaomi set to launch its MiTu in January 2016 in the Chinese market, the ¥269 (US$41) price tag will make it much more compelling for parents to purchase a wearable for their children. Some may even purchase it on top of a smartphone as an additional safety measure.

Germany, Spain and Italy as potential growth markets

While much of the initial demand for children wearables is coming from China, manufacturers should also look to Europe, in particular, Germany, Italy and Spain, as potential growth markets. Among the top few wearables markets, these countries stood out in terms of fertility rates (children born per female), comparable to China. Western countries may be slower to warm up to wearables for children due to the culture of giving their child independence. However, with the sensational reporting by the media around violent crimes and sexual violence, parents may well start to see the relevance of the devices to give them peace of mind when they are away from their child.

Retail volume of wearable electronics against children born per female in 2015

wearable-electronics-sales-against-childern-born-per-female-2015

Source: Euromonitor International

Despite a projected slowdown in growth of consumer electronics products, sales of wearables are set to increase from US$12 billion in 2015 to exceed US$60 billion in 2020. Following tablets, wearables will become the next growth engine for manufacturers and retailers. To capitalise on the growth opportunity, manufacturers will need to continue to expand potential use cases, starting with children’s wearables.