Sales will expand modestly in 2020, with stronger growth from 2021
While the challenges caused by the Covid-19 pandemic are being felt by many segments of the technology sector, wearables have proved resilient. In our new forecast of the global wearables market, published last week and available to subscribers here, we expect to see some growth in 2020, followed by a return to more robust performance in 2021.
The first half of 2020 was undoubtedly challenging for wearables. Growth was slow, owing to disruption of the supply chain and store closures amid the global Covid-19 pandemic. This slowdown was notable given that the wearables category enjoyed strong momentum before the health crisis. Still, it was preferable to the impact felt by some more-established segments of the tech market, such as smartphones, which saw a sharp plunge in sales of upgrade devices. Wearables makers have managed to sustain healthy interest from first-time buyers in particular, and smartwatches and fitness trackers that normally sell well online posted reasonable performances, although sales through traditional channels such as high-street stores were significantly dampened.
However, the wearables market is highly seasonal, with many companies seeing a spike in sales in the lucrative Christmas quarter. Right now, we’re expecting to see a pick-up in performance for the holiday season, with new devices from Apple, Fitbit and Samsung poised to prove popular, among others. Still, this year the economic recession and job uncertainty will force many people to be more careful with their spending, so we may see lower demand than normal for the remainder of 2020.
Overall, the resilience of online sales along with some sound demand for wearables this year means that we forecast shipments of 169 million wearable devices for the year, a rise of 7% from 2019. In the longer term, we expect to see growth recover strongly as suppressed demand carries over into coming years. In 2024, we’re predicting sales of more than 300 million smartwatches and fitness trackers worldwide.
There are several factors driving this longer-term recovery. As well as solid momentum behind the category, which we expect to see return, our research has shown that health- and fitness-tracking capabilities on wearables are extremely popular with customers, and are some of the most important reasons that people choose to buy smartwatches and fitness trackers. We believe that people have become more focussed than ever on tracking their well-being during the health crisis, leading many to consider buying a wearable device. New products like the Apple Watch Series 6, Fitbit Sense and Samsung Galaxy Watch3 should tempt many customers thanks to their advanced sensors.
One segment that has suffered a clear drop in shipments in 2020 is connected smartwatches for kids. In China, where these devices are most popular, sales are expected to drop by about 8 million units compared with 2019, when a solid 28 million gadgets were sold. This is because of weak demand as children have been kept at home by lockdown restrictions. However, we expect that sales of devices aimed at kids and older people will see strong growth over the next few years, not just in China but also in the US and Western Europe, reaching shipments of 40 million devices globally in 2024. Focus from businesses throughout the wearables supply chain on this emerging category should help to support growth.
Overall, although the wearables market will see limited growth in 2020, we expect the market to recover quickly once the worst parts of the Covid-19 pandemic and the global recession have been navigated. Our consumer research shows strong interest in wearables, especially smartwatches, and we predict that growth will return to the levels seen before this year’s dip.
With new devices launching later in 2020 and some great new products expected to perform well in the holiday quarter, we’re confident that wrist-worn tech will come out of the global pandemic with a spring in its step.
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