Essay: Wearable electronics market (Canada, Japan & Australia)

1. Influences:

Factors – Canada Japan Australia

Customers’ demand/ customer influence

• Wearable electronics are gaining more demand as consumers are interested in the navigation features included in smart wearables. For example, many of these devices have gyroscopes, compasses, accelerometers and motion trackers installed.
• Garmin launches its MARQ series of wearable electronic devices to accommodate consumers with a pension for durable luxury smart watches. Also, these smart watches are designed specifically for people who pursue extreme activities and adventure sports such as racing, sailing, exploring and flying.
• Retailers are putting more effort to attract Millennial and Gen Z consumers who are focusing on the shopping experiences rather than the item itself. For example, Tiffany & Co adds a photo booth and café to appeal to younger consumers.
• Manufacturers are shifting to activity bands seeing that these bands are becoming popular amongst runners.
• Demand for products that monitor routes, running time, heart rate and calories burnt are expected to increase in Japan as more people are expected to engage in regular exercises like running. • The increasing trend for activity tracking due to Australians’ love for being outdoors and participating in various sports is driving smaller brands to capitalise on this trend.
• Some customers in Australia are more interested in keeping the classical look on watches. They would buy traditional watches with activity tracking features. Therefore, retailers such as The Good Guys and JB Hi-Fi are expanding their ranges for both digital and analogue activity watches to address the demand.
• Wearable electronics are evolving in regards to functionality due to consumer demand for multifunctionality. More features are included as consumers seek modern designs, standard watch features, in addition to connectivity to mobile phones.

Competitor/other manufacturers’ influence

• Samsung’s recent launch, Gear Sport challenges its rival products such as Apple in terms of smart watch features and Fitbit from the aspect of fitness.
• Apple’s recent and future launches such as its Series 3 Apple Watch and Siri support further cement its innovative position in smart wearables and are likely to gain momentum in the future. • New players entering the market and manufacturer’s sophistication are among the factors increasing consumer awareness of smart wearables.
• Apple’s shares have seen a decline due to growing number of new players in the smart wearables category.
• Traditional watchmaker such as Casio is shifting to smart watches following the rise of smart wearables. Another traditional watch manufacturer is moving lightly into wearable electronics while retaining the traditional look like Citizen in which the brand had partnered with Fossil to create hybrid smart watch.
• Fitbit’s emergence in smart wearables due to the waning popularity of activity bands is affecting Apple’s share in Australia.
• Apple continues to dominate smart wearables category with its release of the new Apple Watch Series 4 in late 2018.
• Following Fitbit’s resurgence in activity wearables category, this action spurs Garmin into offering GPS accuracy in its activity wearables which has received positive customer feedback.

Retail network/distributors influence

• Many retailers are implementing experience shops like concept stores and pop-up stores. However, services like styling, recommendations still connect with customers. This provides an opportunity for wearables retailers to offer customers the chance to experience and engage with the brand.
• Internet retailing such as e-commerce and omnichannel retailing is expected to show stable growth in all categories.
• Retailers’ advertisements to get consumers to buy other things beyond school supplies during back-to-school season provide an opportunity for wearables retailers. Additionally, consumer electronics devices are sought after for use in education.
• More retailers are merging apps with their physical stores in Japan. This would enhance the consumer experience and result in efficient operations. For example, customers of Nike could reserve products to smart lockers by using the company’s app. The same could be applied by wearables retailers.
• Retailers are threatened by the increasing operational costs, changing consumer behaviour and online shopping. These threats are limiting their sales growth for the existing retailers and would demotivate any new retailers in the wearables market.
• Online sales events held by retailers are highly anticipated by consumers who love the prospect of discounts and would rather wait for such events than purchasing certain items.
• Some retailers are unable to operate 24 hours because of restrictions on trading hours while some regulations are increasing the costs for retailers. These difficulties that retailers are facing, limits them to innovate.

2. Key market trends:

In Australia, the market size for wearable electronics can be considered as very large. Australia has population of over 25 million (Population Australia, 2020) and the wearable electronics market has been able to capture around 2.1 million users (Statista, 2020). Based on Statista, total revenue of the industry amounted to US$180 million in 2020. There are also many number of players with each of them holding a fair amount of share in the market. Next, there are changes that have taken place in the market as well as changes that are predicted to take place in the future. Some of the changes are activity bands are losing relevance as demand increases for multifunctional device such as activity watches and smartwatches. As of note, demand for more basic activity bands are declining in 2019 and forecasted to have a stronger decline over the years. Another change is some retailers has expanded their ranges of both digital and analogue activity watches to address as some are interested in the classic look of analogue watches. However, it is predicted that consumers will switch to multifunctional device despite appreciating the classical look of an analogue model as the price of analogue activity watches continues to rise. Also, Australians’ love for being outdoors makes them appreciative of the activity tracking features and more brands are looking to capitalise on this trend for activity tracking. The buying pattern within the market for Australians includes how consumers react to sales promotional techniques. For example, Australians seems to love online sales events because of the discounts. As such, they would wait for these events to buy certain items. Another point is Australia has modified rebuy situation where consumers are constantly looking for certain modifications in the wearable devices such as the analogue activity watches.

In Japan, the market size is the biggest compared to Australia and Canada. According to Statista, the wearable electronics industry is able to racked up a total of US$337 million revenue and 4.5 million users from a total population of over 126 million (2020). Meanwhile, the number of firms in the market is smaller than in the two countries with Apple dominating the market and holding the biggest share of wearable electronics. Next, wearable electronics in Japan has changed over the years in regards to new players entering the market, rise of digital activity watches and traditional watchmakers’ response to smart wearables. Notably, the year 2019 demonstrates new players into the smart wearable category as Apple had faced decrease in its share because of this. The rising number of runners in Japan also affects the demand for digital activity watches in which these runners are interested in sophisticated wearables. As time goes, traditional watchmakers are adequately adopting to the rise of smart wearables through three responses. Firstly, some manufacturers kept their analogue craftsmanship like Seiko whereas some are installing smart features while keeping the classic watch look like Citizen. On the other hand, some manufacturers like Casio are moving deeply into wearable electronics. Wearable electronics are expected to rise in sales to 2.3 million units by 2024. It is known that consumers in Japan emphasize more on convenience. This affects their buying pattern, as consumers tend to search for convenient products that would help with their daily routines. For example, Japanese who goes walking or jogging frequently buys digital activity watches instead of activity bands because digital activity watches are easy to set up, not require a smartphone and can go days without recharging.

In Canada, the market size is relatively big as the wearable electronics industry collected a total revenue of $US244 million (Statista, 2020). Likewise, the number of firms within the market is a fair amount with big players such as Fitbit and Samsung. The wearable electronics market has gone through some changes as can be seen from the perspective of consumers and new innovations. Wearable electronics is relatively a new category but it is moving from the novelty phase in Canada as more consumers are accepting it in their life. To point out, demand for smart wearables are increasing as new features attract a wider base of consumers. Also, navigation functions in smart wearables are experiencing significant developments such as having gyroscopes, compasses, accelerometers and motion trackers installed. Some future changes predicted are more product developments such as stress level and blood glucose level monitor in smart watches which will likely support sales growth. Additionally, wearable electronics sales are set to hit 4.1 million units in 2024. The buying pattern for Canadians is straight rebuy where people would buy new releases from brands like Apple Watch where it already reached maturity in Canada.

3. Canada’s market:

Competitors

1. Samsung Electronics Canada Inc.
2. Apple Canada Inc.
3. Fitbit Inc.
4. Garmin Ltd.

Competitor’s Strength

1. For Samsung, the strengths being its products are priced well below its rival products such as Apple. Also, its ability to introduce new models regularly.
2. For Apple, the strength is its Apple Watch. It is believed that Series 1 and Series 2 has reach maturity in Canada.
3. For Fitbit, the strengths lies in its competitive side in the wearables category besides having the largest share of wearables electronic (36.1%) in Canada.
4. For Garmin, the strengths include its MARQ series being considered as high-end and luxury smartwatches. Next, the MARQ series of wearables are engineered for adventure sports like flying, racing, sailing and exploring.

Leading market player

In my opinion, the leading market player in the wearables scene is Apple. Its wearables include the Apple Watch brand that has reached maturity in Canada and AirPods. Both are successful innovations by the company. In Apple Watch case, it is considered more than just a fitness tracker but also as technology that can be worn on wrist. Therefore, people would buy it because they use it in their day-to-day routines and not necessarily for fitness only.

Opportunities

1. Since health-related functions are popular among users, Apple has planned to approach more health insurance providers and form a beneficial partnership.
2. Furthermore, Apple should take this opportunity to create better wearable electronics devices that constantly update information including blood glucose levels and stress levels and in useable form for users.
3. Besides, its latest Apple Watch Series 3 has cellular connectivity which means it could be connected to other internet of things devices.

Threat

Although Apple has solidified itself as a brand, it faces big competition in the smart wearables category. It goes up against other big names such as Samsung, Garmin and Fitbit. With advancement of technology and changing consumer demand, the competition is only getting stronger in this modern era. Apple would either has to introduce new technologies or consider revising the pricing to keep its competitive advantage.

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