Wearables: the route to the connected home

The importance of wearables in the future connected home.
07 January 2020

Business Unit & Commercial Director

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Google’s recent acquisition of Fitbit signals their belief in the importance of wearables in the future connected home, so why do people purchase a wearable? There used to be a real distinction of functionality between fitness trackers and smartwatches, but as the lines in wearables are blurring so consumers face an interesting decision journey when choosing and switching between brands.

For the battle of the big brands, understanding and subsequently leveraging the product drivers, key influences and touchpoints becomes paramount. Whilst we know that consumers purchase wearables for fitness/health, weight loss and connectivity, the primary drivers vary by brand. For Apple owners, connectivity and organisation are still the main drivers, whilst Fitbit owners purchased primarily to improve health and fitness. We will be using our ComTech panel to track over time how the importance of these drivers changes, as the differing brand offers evolve.

In the US Fitbit has the largest share of wearables at 40% and historically has had a primary focus on fitness tracking. It appeals to older audiences (45+) compared to other wearables and is at the cheaper end of the market with over 76% of owners being in the low/mid spend price tier, with growth in share coming from the mid-tier. At this price point Fitbit ownership has seen a higher incidence (index 132) of gifting compared to other wearables and brand choice influencing is done by friends and family.

So, do people start with a fitness tracker and then upgrade to a smartwatch? Smartwatch share of wearables in the US is on the increase. In Q3 2017 smartwatch ownership was only 6% with fitness trackers at 11%. With total wearables in Q3 2019 at 21% share is split 50/50 between smartwatches and fitness trackers. From the ComTech panel we know that of people who owned a fitness tracker in Q3 2018, Fitbit owned a whopping 75% share. However, worryingly for Google, in Q3 2019 of those that purchased a new smartwatch only 37% stayed with the Fitbit brand, but 47% chose Apple, so upgraders are leaving the brand.

Many people will be watching with interest to see how the Google acquisition will develop the Fitbit product offer, as Google will be looking to further develop its own smartwatch software Wear OS. With concerns over trust permeating many Google products, such as smart speakers, and concerns over the perceived potential to sell personal or health information (which Google have denied) this could nudge consumers to switch to alternative brands. However, if the features and benefits achieved by linking personal health information to Google searches outweigh concerns, then people might make a choice to stay with the brand. Consumers are increasingly concerned about the privacy and control of their personal data. With Apple and Samsung also increasingly offering wider ranges of wellness and health features, the need to protect personal data and trust in brand could become a driver for brand choice within wearables.

Apple with the second largest share of wearables in the US at 27%, have put a more recent focus on fitness and health with the inclusion of a heart rate tracker, female cycle tracker (think fertility here) and a good tracker for all training options alongside the communications notifications and music streaming and access to apps that you expect from a smart device. At the premium end of the market Apple's 64% of owners are in the high/premium spend tier, and Apple converts a higher percentage of sales through its stores compared to other wearables, so a high street presence remains a vital touchpoint for this brand.

Samsung with just 7% share of wearables in the US, have invested in the Samsung Galaxy Active watch to specifically deliver a product for the active market. This is providing a real point of differentiation with 26% of owners citing a ‘specific sports model’ being a key purchase driver compared to 24% Apple, 16% Garmin and 12% of Fitbit owners. A key touchpoint for Samsung owners is also instore with almost one third of owners visiting a retail store to browse compared to 23% for all wearables. However, for Samsung recent purchasers, two thirds of consumers still ended up purchasing online. Samsung customers are also the most satisfied of wearable owners, so significant work has obviously been done to ensure the best customer experience, increasing the chance of customer retention and reducing customer churn.

Garmin remains a more niche brand targeting the ultra-outdoor enthusiast. With solar charging, elevation adjustment, oxygen saturation measurements… it is generally targeting the seriously active adventurer. With a market share of only 5% in the US, Garmin would do well to consider wearables product evolution and positioning alongside the tech giants. For most wearable owners, ‘brand’ is the top purchase driver, however for Garmin it is functions available (60% of owners stated this was a main purchase criteria), with fitness tracking being of primary importance. Keeping a focus on developing this must be an important customer retention strategy. Historically a larger % of their consumers were in the low-price tier, but Garmin customer profile is changing and in the past year the percentage of owners in the mid-price tier has grown from 15% to 30%. Cost is a more important purchase driver for Garmin customers than other wearable owners, with over 45% stating this was a main criterion for choice. With over 70% of recent purchasers doing so online, key touchpoints in converting these discerning consumers is through website reviews. Slightly concerning for Garmin, are the lower levels of satisfaction amongst their customers. Identifying customers at risk of switching and their pain points will be important for Garmin to retain customers in this increasingly competitive sector.

There is huge scope for the whole wearables category to grow and tracking from the Worldpanel ComTech panel means Kantar will be able to identify the tipping point for mass adoption and the key triggers. For now, smartphones are the communications tool of choice. In 2016, futurologist Ian Pearson, declared that by 2025 smartphones will be obsolete as augmented reality takes hold. He believes that there will be a small bracelet (wearable) that pulls up a hologram screen in order to text and send phone calls. Seems like Google might be on to something and the tech giants agree.

Notes to editors

Data is based on Kantar’s Worldpanel ComTech, US Q3 2019. Globally, the panel tracks the decision-making journey for technology including smartphones, tablets, laptops, TVs, smart speakers, domestic appliances, and also Wearables (smartwatches & fitness trackers). From purchase triggers, brand consideration, evaluation, touchpoints & intention through to purchase, usage, satisfaction and loyalty/switching behaviours, the Kantar Worldpanel ComTech team provide strategic guidance on how to improve customer acquisition and retention.

Comtech global panel shows that wearables ownership varies considerably. In Q3 2019 21% of US and Australians, and 24% of people in the UK own a wearable (smart watch or fitness tracker). However, in Japan only 5% of people own a wearable. Europe ownership ranges from 26% in Norway to just 11% in Netherlands.

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