Market Overview

According to the data of Japan Clock & Watch Association, size of the domestic watch market for 2019 was 886,700 million yen based on the retail price, 108.0% of the size of the previous year.

Driven by the demand of two major customer segments, Japanese wealthy population and inbound tourists, the market saw strong sales in 2019. However, polarization in the industry is seen as many companies were affected by consumers' reluctance to buy as the economic outlook became increasingly uncertain after the consumption tax hike. The gap between the winner channels and loser channel has increased: While department stores enjoyed strong sales brought about by high-end brands, specialty stores without top brand watches struggled.

Sales increased especially at airport terminal stores and online stores (e-commerce). In particular, airports that have become increasingly popular in recent years as shopping mall showed steady sales growth. Such airports target not only to inbound tourists but also to Japanese tourists by offering travel bags, suitcases, stationary, and casual wear.

Noteworthy Topics

Brands Reaching Millennials & Reinforcing Digital Communication Gains Market Presence

The millennials* have become a key customer segment for the watch industry, despite their purchasing power that is not as strong as that of the wealthy population. A watch that connects to millennials becomes a trend of the season and has a good chance of winning popularity of other (wealthy) customer segments as a ripple effect. In fact, millennial strategy is the customer acquisition strategy. There is no future for the brands unless they are accepted by the young generations. Therefore, it is important that the brands demonstrate market presence as the watch brand by appealing to the millennials continually with brand collabs and communication via digital media.

*Although there are several definitions for the millennials, in this research, it indicates a generation born between 1980s to late 1990s that have gone into the workforce around 2000, the young people at the age of mid 20s to late 30s as of 2020.


 


 

Future Outlook

The domestic watch market is facing a tough situation in 2020, with inbound demand, which had been strong in the past, showing decline due to the influence of COVID-19. While uncertainty remains, some companies have taken the lead in new initiatives, such as shifting to digital marketing and building a closer connection with fans through social media and member organizations. 

Going forward, it is critical for the brands to provide online events/customer service and e-commerce experience that are as good as, better than, or different from what are presented at physical stores (storefront). For this reason, companies that elevate their marketing by creating direct and frequent customer touch points though a method like personalized marketing are likely to attract more attention. In addition, under the situation where the rise in inbound demand cannot be expected, reinforcement of overseas business increases importance for domestic makers.

Research Outline