Wearables Sales Hit by the Growing Cost of Living

Demand for wearables is set to decline for the first time in the market’s history, in what will be remembered as a difficult year. A total of 215 million smartwatches and fitness trackers are forecast to be sold worldwide in 2022, down from 232 million in 2021.

Globally, rates of new adoption and product replacement have slowed as inflation and other economic factors have curbed people’s ability to buy wearables. Although total ownership is still on an upward trajectory, many people are expected to think twice about purchasing new products. Demand from existing users has also felt the effects of the difficult economic climate — they choose to keep devices for longer, waiting to replace them until their spending power improves.

Although the economy in 2022 is expected to slow purchases, the pace of new launches and development is set to grow. The launch of Google’s Pixel Watch is expected to spur new adoption from Android smartphone users, alongside igniting interest in smartwatch investment from other Android-based firms. We predict that the release signposts imminent additional investment in the Wear OS platform, powering new experiences that compete with the Apple Watch offering (see Instant Insight: Google Unveils Update to Pixel Family). However, as consumers look to monitor spending on non-essentials this year and next, the effects of the launch are likely to come in the long term.

The outlook for the wearables market remains poor for 2023, with shipments of smartwatches falling by a further 1% and fitness trackers by 2%. Lingering economic difficulties will lead to a contraction of demand for both categories, causing replacement and new adoption purchases to fall further.

Despite a negative short-term outlook, we expect some recovery in 2024 as the economic picture improves. From 2024, the smartwatch market is expected to return to growth, leading to sales of 224 million units in 2026. Advanced economies are forecast to maintain a strong lead in smartwatch adoption rates, but as low-cost smartwatches and developments in Wear OS devices provide more options for Android users, smartwatch demand in developing countries is set to blossom.

Fitness trackers played an important role in establishing demand for wearable technology, but the outlook for the product category has become less rosy. The fitness tracker segment is forecast to remain healthy worldwide, experiencing a growth spurt in 2024 propelled by the growing wearables marking in developing countries, with sales reaching 112 million in 2026. However, we expect many consumers in developed countries to gradually shift to smartwatches, resulting in a declining market for fitness trackers in North America, Western Europe and developed markets of Asia–Pacific.

Although 2022 and 2023 aren’t shaping up to be positive years for the wearables industry, we expect tremendous growth moving forward. By 2026, the number of wearables owners is set to double from 2021, reaching close to 1.2 billion. As this pool of users continues to grow, the technology industry has a huge opportunity to invest in new services targeting the digital consumer.

For a more detailed forecast of the wearables market, see our Market Forecast, Wearables, Worldwide, 2022-2026.