Fossil Group’s chief executive officer believes wearable technology such as smart watches are taking some of the ‘oxygen’ out of the traditional Swiss watch market.
Kosta Kartsotis spoke to analysts via conference call to discuss the group’s Q2 results, which saw sales down by US $50.9m (£32.6m) due to the strengthening US dollar. Using a consistent currency the group’s sales were up two percent.
"I think technology and the whole idea of wearables … has taken some of the oxygen out of the Swiss business," Kartsotis said.
He suggested that the arrival of technology companies in the fashion watch arena meant the industry would have to adapt in a similar manner to remain relevant.
"We also see technology emerging as the latest trend in fashion, with the growing interest in wearable technology inspiring new entrants into the watch space," he said.
Fossil Group, which includes the watch brands Fossil, Michele, Relic, Zodiac, Burberry, Emporio Armani, Armani Exchange, Michael Kors, Marc by Marc Jacobs, DKNY, Karl Lagerfeld, Tory Burch, Diesel, Adidas Originals and Skagen as well as retailer Watch Station, recorded Q2 revenue of US $740million (£474m), down from $773 the previous year.
Fossil Group’s Q2 period also marked the launch of the Apple Watch.
Kartsotis also confirmed that Fossil was working on three technology based product categories. Fossil was one of the first traditional watch companies to sign up with Google’s Android Wear and is planning a smartwatch launch later in the year. He also mentioned ‘smarter watches’ which he described as analogue watches including sensors, perhaps along the same lines of the MotionX system currently being used by Frederique Constant, Alpina and Mondaine. These watches are also scheduled for 2015 with Kartsotis suggesting they would have the greatest long-term impact for Fossil Group and that it might reach the stage where every Fossil Group watch may feature technology. The final category mentioned was smart jewellery.
Perhaps most controversially, Kartsotis suggested that technology-imbued watches would give access to user data that could be fed into the company’s CRM software and used for marketing purposes. Most technology players entering the smart watch sector, including Apple, have been keen to point out they would not harvest user data.