Personal Accessories: Technology as the Answer to Future Growth
Outlook for the personal accessories industry in 2016 is looking up, with an estimated growth rate of 2%. With the strengthening US dollar, demand in North America for personal accessories is gaining traction as the economy is showing signs of improvement following the recession. However, currency translation effects continue to take a toll on Latin America and Eastern Europe, leading to an overall decline of 6% and 8% respectively.
Personal Accessories: 2016 Market Size
Watches was hit the hardest amongst personal accessories with no growth in 2016. However, despite the strengthening Swiss Franc, demand for mechanical watches continues to boost the performance of watches. Globally, mechanical watches saw growth of 1% in 2016. Threatened by the invasion of smart watches, quartz digital watches registered the worst performance amongst watches, with an overall decline of 3% in 2016.
As technology continues to shape purchase routes, internet retailing is fast becoming an integral part of the personal accessories industry. The percentage of internet retailing as a channel for sales of personal accessories is experiencing double-digit growth in 2016. However, among the categories within personal accessories, year-on-year growth of internet retailing as a sales channel is the slowest for watches, which saw 6% growth in 2016. Jewellery on the other hand experienced the highest year-on-year growth of internet retailing as a sales channel, with 12% growth in 2016.
As more fine jewellery brands are jumping on the internet retailing bandwagon, this is expected to contribute to the growing percentage of internet retailing as a sales channel for jewellery sales. Apart from establishing their own company-operated online stores, fine jewellery brands are collaborating with luxury internet retailers to tap onto their network, thus supporting organic growth. Popular luxury internet retailers include www.net-a-porter.com which recently partnered with third ranked fine jewellery brand in the world, Tiffany & Co.
Players in the watch industry have upped the ante in wearable electronics, embracing technology for future growth. Fossil Group Inc’s acquisition of wearable technology innovator Misfit and the company’s plans to venture into wearables, followed by luxury conglomerate LVMH Moët Hennessy Louis Vuitton SA’s foray into wearables with the launch of Tag Heuer Connected, reveals the plans of watch players in stepping up their game when faced with competition from smart watches.
With LVMH Moët Hennessy Louis Vuitton SA’s strong partnership with Google and Intel, this provides a strong platform for future innovation. This has helped and will continue to propel other brands within the company’s portfolio, such as Bulgari, in developing its range of smart watches or smart bracelets. Looking towards technology as an answer for future growth correlates with sustainable growth for industry players, supporting product diversification and understanding the inherent role of technology in today’s world. Despite being the number one in watches, with a value share of 6.5%, Rolex is only present in high mechanical watches has not released any announcements with regards to its intention in dabbling in smart watches. Although many traditional Swiss watch makers like Rolex, Patek Philippe and Audemars Piguet have remained steady amidst the conundrum facing mechanical watch brands’ product diversification to smart watches, the impact of smart watches on demand for traditional watches might be greater in the future with the proliferation of smart watch launches by traditional Swiss watch makers.
The technology frontier
Although technology is the answer for future growth in personal accessories, many industry players do not have the expertise in extending their market share with the help of technology. Hence, more collaborations can be expected in the near future to support industry players’ move in inculcating technology to drive organic growth for the company.