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Watch and Clock Market: Divided Outlook for 2018

The 2017 Hong Kong Watch & Clock Fair Survey

The HKTDC Hong Kong Watch & Clock Fair is the largest event of its kind in the world. This year, HKTDC conducted face-to-face interviews with 503 buyers and 331 exhibitors [1] attending the event in order to gauge the industry view as to current market prospects, product trends and e-tailing developments.

The results showed that the industry was divided when it came to the level of sales anticipated over the next 12 months, with exhibitors showing significantly higher optimism than their counterparts on the buying side. Greater unity was on show when it came to evaluating product trends, with the majority of buyers and exhibitors agreeing that smart watches will remain the most popular items well into 2018.

Divided Outlook for 2018

In general, buyers and exhibitors were divided when it came to the market outlook for 2018. While 67% of buyers expected overall sales to remain unchanged or to decrease next year, 54% of exhibitors expected sales to increase as a result of surging production/sourcing prices.

Chart: 2018 Market Outlook
Chart: 2018 Market Outlook

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Amongst the buyers, 63% expected that the retail price of their products would remain unchanged in 2018, while 32% of them expected an increase in the retail price. By contrast, only 5% of the buyers expected the retail price of their products to actually decrease.

Meanwhile, 53% of all exhibitors expected the FOB selling price of their products to remain unchanged in 2018, while 41% of them expected an increase. A comparatively small number of exhibitors (7%) expected a decrease in the overall FOB selling price.

There was a greater difference of opinions, however, with regard to sourcing prices and production costs. In all, 56% of buyers expected that their sourcing price would remain unchanged, while 42% of them anticipated an increase. Only 2%, however, predicted any decrease. Among the exhibitors, only 32% anticipated that their production costs would remain unchanged, while all other exhibitors (68%) believed their production costs were set to rise.

Smart Watches Remain Most Popular Product

When it came to identifying the most popular product in the sector, smart watches attracted the highest level of endorsement from both buyers and exhibitors (33%), with digital analogue coming in second with the backing of 23% of respondents. This marks the third time that smart watches have been designated as the most popular items in the HKTDC’s annual Watch and Clock Exhibition survey.

Chart: Most Popular Watch Category
Chart: Most Popular Watch Category

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In terms of the category seen as having the greatest growth potential in 2018, 46% of all respondents singled out leisure watches, while also indicating that they expected such items to retail for around HK$478. Overall, only 7% of respondents believed that luxury/jewellery watches had the greatest growth potential in 2018, a sign, perhaps, of continuing economic uncertainties.

Chart: Greatest Growth Potential by Product Type
Chart: Greatest Growth Potential by Product Type

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In terms of optimal product development strategies, 47% buyers and exhibitors backed ‘going smart – having the facility to interact with smart devices’ as the most significant route for product development over the coming year.

Among buyers, the next most important strategies were ‘celebrity-endorsed watch collections’ (32%) and ‘collections that align with the current season’s fashion trends’ (28%).

Many of the exhibitors, however, had a somewhat different view. Overall, ‘collections that align with the current season’s fashion trends’ (40%) took the second slot, followed by ‘mix and match watches (timepieces that can be customised to match clothing)’ (33%).

Chart: Top Five Product Development Strategies
Chart: Top Five Product Development Strategies

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E-tailing: Increasingly Important

Online trading is now a significant sales channel in the watches and clocks sector. According to this year’s survey results, some 54% of buyers and exhibitors use e-tailing as a direct sales channel, a rise of 6% compared to last year. Of those companies currently not engaged in e-tailing, 24% indicated that plans were in place to start selling online within two years. Of those companies currently engaged in e-tailing or planning to be, 55% see the channel as suitable for selling leisure watches, followed by fashion watches (39%), smart watches (31%) and sports watches (28%).

Of those companies currently engaged in e-tailing, 49% used the Alibaba platform for sourcing, followed by eBay (45%), Amazon (33%) and Taobao (33%). On average, e-tailing business accounts for one-fifth of the total sales revenue of such companies, with that share expected to increase by 13% over the next two years.

Chart: Preferred Online Trading Platforms
Chart: Preferred Online Trading Platforms

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China’s Market Potential

Of this year’s respondents, 55% of buyers and 68% of exhibitors currently sell into mainland China. In terms of future prospects, exhibitors were more optimistic than buyers with regard to the prospects in this particular market. In total, 61% of exhibitors expected the market to grow over the coming year, while only 52% of buyers expressed a similar view.

Chart: Mainland China: Growth Prospects
Chart: Mainland China: Growth Prospects

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Overall, the expectation of increased market demand (85%) was given as the key reason for anticipating a growth in sales across the mainland. Of those companies expecting their mainland sales to decrease, the key factors for this were seen as intensifying competition (76%) and decreasing demand (38%).

Mainland Development Strategies

Overall, both buyers and exhibitors have taken very similar approaches in terms of strengthening their presence on the mainland. This saw both groups concur that expanding their existing retailing/wholesaling mainland network was their primary market development strategy.

Chart: Mainland Development Strategy
Chart: Mainland Development Strategy

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Profile of Respondents

503 buyers: 50% were based in Hong Kong, 14% on the Chinese mainland and 36% in other regions.

331 exhibitors: 48% were from Hong Kong, 31% on the Chinese mainland and 21% in other regions.

 


[1] The 2017 HKTDC Hong Kong Watch and Clock Fair was held from 5-9 September.

Content provided by Picture: Louis Chan
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