Is it possible that wrist watch production and sales could actually be growing? Conventional wisdom is that the always with you devices such as cell phones and ipods have driven down demand for watches, particularly in the younger generation who have grown up with cell phones. Data from 2003-2005 supports this premise– here are some key stats from a Wall Street Journal article in 2005.
“In 2005, sales of watches that cost roughly $30 to $150 — those usually bought by teens and young adults — declined by more than 10% from 2004, says Deborah Rudinsky of the Doneger Group, a New York fashion-merchandising consultant. (Watches in other price ranges — cheaper and more expensive — saw single-digit growth.) Domestic wholesale sales of Fossil Inc.’s youth-oriented Fossil brand watches fell 13% during the quarter ending Oct. 1, its fifth straight quarter of year-to-year declines.
Exports of Swiss plastic watches such as Swatches were down 12% from January to October compared with the year-earlier period, according to the Federation of the Swiss Watch Industry in Bienne, Switzerland. Roughly 30% of those exports go to the U.S. Genender International, which licenses watches for teen brands such as HotKiss and Unionbay, says its sales of watches for young men have fallen by around 5% over the past several years due to competition from other gadgets.”
Given that, this article in the Times of India from February 2009 at first glance is shocking to me. The Times of India reports the following data points:
- The fastest growing industry in the Indian state of Karnataka (where Bangalore is located) in 2008 was the wrist watch industry.
- The number of wrist watches produced rose from 6 million units between April-December 2007, to 12.5 million units in the same period in 2008, a 109% growth rate, compared to only a 0.32% growth from 2006 to 2007.
- Only the cement industry’s growth came close during that period at 70%. Cigarettes was third at 8%. Most other industries showed negative growth.
- Rise in watch production was a result of local consumption combined with an increase in export orders.
Globally, I can’t believe that the trend in wrist watch sales has stopped declining. My initial cursory search for more recent wrist watch sales data since 2005 has been fruitless. My sense is that the growth in India cited in this article is a local phenomenon and that consolidation of production may have benefited that region. However, it does seem plausible that fashion purchases have increased and may have stemmed the rate of decline globally as watch companies have changed their marketing and product strategies to emphasize the fashion value of their products. Also, a single data point from this weekend also surprised me– my 12 year old nephew told me that he’d like to buy a watch, and he already has a cell phone. He also states that many of his friends do wear watches at school.
I’ve always used the example of the watch industry when talking about the challenges of long term planning (a key aspect of my job) — how many watch companies in the early 1990’s would have labeled mobile phones as their biggest threat 10-15 years out? Perhaps, the tide has started to turn.