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Reading the media could arouse the impression that the wearables market is solely the domain of smartwatches, such are the headlines dominated by tech giants we traditionally know from the smartphone market. But dig a little deeper and you’ll find that, in fact, a lot of top-performing wearable brands have a legacy in the health and fitness industry, not in smartphones. So what does the latest sales data tell us about which devices are currently king? And where should brands focus their efforts in the future?
With its roots in the health and fitness industry, the majority of sales in the wearables market actually continue to be from health and fitness trackers (HFTs) or wrist sport computers (WSCs). Sales data from retailers across 16 European countries* reveals that in the first half of 2015, these devices made up 78% of wearables sales. And without a doubt, it’s not uncommon to see people wearing a device either daily to count the number of steps they’ve taken, or when exercising to gather data on heart rate, distance covered, and other variables.
Of course, the media buzz around smartwatches hasn’t been about nothing. Increasingly, convergence is happening in the wearables space, so much so that smartwatches will soon be one of the most important wearables segments (see our March global wearables market press release). With high-profile smartwatch launches and media attention helping to spread and glorify these compact devices, our European data shows that the smartwatch category grew at an impressive pace of +126% in volume in the first half of 2015 versus first half of 2014. So why the current heavy presence of HFTs and WSCs in the market?
In comparison to the multiple benefits and functions of a smartwatch, fitness devices like activity trackers and wrist sport computers may look somewhat limited in functionality but this might actually enable them to elaborate on an important point when it comes to marketing – these devices set clear upfront expectations about the use of the product before buying it. Even for consumers who aren’t glued daily to tech blogs, the use of an activity tracker or a GPS sports watch are pretty much clear upfront.
Furthermore, the benefits they offer are unique and unmatched by the biggest rival of wearables so far – the smartphone. While most smartwatches offer similar functionality to that of a smartphone (largely because they are connected to the latter!) such as answering calls, reading or writing messages, displaying notifications and giving directions, fitness devices focus on other needs and situations where wearing a smartphone is inconvenient (e.g. running, working out, or swimming). With this focus on specific use cases they play a strong transformative role in the healthy lifestyle movement where wearables in general help to motivate the wearer by setting up personal goals during training sessions.
Lastly, the current trend towards fitness devices, at least for HFTs, is fueled by cheaper average sales prices than in other categories. While a smartwatch sells at an average price of €174, a HFT costs around €96 (as of June 2015). HFTs are therefore more likely to be tested in the first place but they do also open the opportunity for upgrades to a more expensive smartwatch in the future. In fact, many legacy brands that built a certain reputation in the fitness area are now successfully moving into the smartwatch category with new-generation devices; a new breed of device is emerging – one that provides smart notifications along with activity tracking as core functionality.
As smartwatches further emancipate themselves from smartphones with their own dedicated apps from the developer community, there is little doubt that the current picture will change. Inevitably, smartwatches which integrate sophisticated fitness tracking capabilities will one day lead the market. But for now, while smartwatch prices remain high and the benefits of HFTs appear clearer, it’s evident where consumers’ preferences lie.
Brands need to pay close attention to the pace at which this market evolves. From a product development and marketing perspective, the focus should be on emphasizing the unique benefits devices provide and which are of most value to consumers. Besides unprecedented technical features and applications, one possible focus is to hone the design so it’s tailored to a specific target group. Likewise, an exclusive brand image that individuals can express their personal lifestyle with and more importantly differentiate themselves from others can also do the trick.
For more insights into the wearables market or to find out about our point of sales data, please contact Jan.Wassmann@gfk.com
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