Michael Kors is positioning its new smartwatch to grow its declining watch category, as well as boost sales momentum in China.
The Access Runway Smartwatch, which was released Monday, adds more features to the brand’s first Access Smartwatch: The new version includes heart-rate tracking, swim-proof functionality, payment technology, untethered GPS and an assistant function. All of the features are supported by Google, through Michael Kors’ ongoing partnership with the technology company, but to include China’s customer base, the brand sought out local partners to match each function. In China, users can access the features through China’s Mobvoi app store, and will have capabilities powered by Mobvoi Assistant, Tic Health and Alipay.
The launch comes less than a week after the brand reported that revenue for its Michael Kors Licensing business, which houses the watch category through a licensing agreement with Fossil, fell by 5 percent. The goal is that, by pushing its smartwatch category and updating its fashion watch line, as well as removing it from Michael Kors stores, the category will return to growth by fiscal 2020.
John Idol, CEO of Michael Kors, said that smartwatches currently account for 25 percent of the business, and he wants to double that, to 50 percent.
“We all know who the big leader in [the smartwatch category] is,” Idol said during Michael Kors’ first-quarter earnings call for financial 2019. “But we think we’re right up there. We think we’re possibly No. 3 in the world, in terms of a singular brand in this area. So it is a very, very serious commitment on our part and by Fossil’s part. And that being said, we are not backing away one iota from the fashion watch business.”
The Michael Kors brand’s momentum is in Asia, particularly mainland China. For the most recent earnings quarter, revenue in the region grew in the double digits (the brand doesn’t specify figures for results by region), and 24 new stores have opened in Asia since the same time last year. Idol said the brand will continue to invest and grow its strategy in the region, falling in line with other luxury brands who are seeing opportunity to drive revenue by selling directly to the Chinese consumer.
Earlier this month, the brand launched a WeChat store front to sell a line of handbags made in collaboration with Chinese influencer Yang Mi, which pulled in data from its local Michael Kors e-commerce site to target customers specifically on the platform. The line of handbags sold out in the temporary WeChat store.
The Runway smartwatch will be sold in Michael Kors stores, on its website and in some retailers, although the company hasn’t specified which stores it will partner with. But to be the leader for luxury smartwatches, the brand will have to grow globally.
“Other luxury companies are dipping their toes in water when it comes to wearable technology but are not diving headfirst into the smartwatch market. That’s a totally different beast,” said Ramon Llamas, research director of mobile devices at IDC.