Fossil Catapults into the Future with Wearable Technology
Fossil Group's digital and omnichannel initiatives drove strong growth in its e-commerce channel, however third quarter net sales decreased 8%, and on a reported basis declined 14% to $771 million. The company's Fossil brand drove a double-digit increase in the company's global e-commerce business driven by higher traffic and improved conversion rates. The company launched a new Fossil website during its third quarter that incorporates brand content and stories, as well as an enhanced customer shopping experience, improved mobile capability. Behind the scenes the company has an improved content management system.
"The challenge remains with our watch business, which declined in the quarter," commented Kosta N. Kartsotis, Chairman & CEO. "The traditional watch category remains sluggish, as tech-enabled devices offer consumers additional choices."
Moore’s Law, which maintains technology doubles every two years, is impacting retail on a grand scale and the resulting digital transactions influence $2.2 trillion in retail store sales today. How will incumbents keep up? How will retailers navigate an increasingly competitive business environment and innovate their value proposition? Retail leaders from top brands, including John White, COO and EVP of Fossil Group, Inc., will provide a look into the future of the industry during the "Retail Dsrupted: Navigating the Digital Age" session at NRF's Big Show 2016.
According to Dennis R. Secor, EVP, CFO and Treasurer, the data the company collects suggests that very recently tech-enabled watches are clearly impacting traditional watches.
"Currently, technology is emerging as the latest trend in fashion with a growing interest in wearable technology, inspiring new entrants into the watch space, as well as explosive growth in activity trackers," said Kartsotis.
Enter Fossil Group's acquisition of Misfit, Inc. in November for $260 million.
Fossil Group hopes the acquisition will allow the company to expand its addressable market, offering consumers both traditional timepieces and connected accessories. Misfit brings to Fossil Group a scalable cloud and app platform, a software and hardware engineering team, a native wearable technology brand and a pipeline of products.
Misfit is a company that started just a few years ago and is led by Sonny Vu, who will join Fossil Group as the President and Chief Technology Officer of Connected Devices.
The company expects to integrate Misfit's technology platform into its Fossil and Skagen brands, and has the opportunity to do the same across its portfolio of brands. Misfit is also a wearable technology brand in the activity tracker space, one of the fastest-growing segments in accessories, given strong consumer interest in learning more about health, wellness, and improving the quality of life.
Fossil Group also hopes to accelerate Misfit sales growth as it leverages its distribution platform and Misfit's pipeline of products. The company plans to develop technology-infused products for its portfolio beginning in holiday of 2016.
Last month, the company launched its first connected accessories product with the Fossil Q product line. This is its first-generation of wearable technology products that combines fashion and functionality.
"We distribute the assortment through select Fossil retail doors and completely sold-out the entire production quantity intended for our select wholesale partners," said Kartsotis.
In the stores now are two styles of watches that are non-display and two styles of tracker devices or connected bracelets. The Fossil Q Dreamer and Reveler are designed for both men and women and the company's non-display fashion activity trackers include notification alerts in the form of vibrations and LED lights with a battery life lasting up to one week.
The Fossil Q Grant is infused with technology that interacts with a smartphone, and notifies the wearer of messages and phone calls from selected contacts through an LED indicator and general vibration. This battery also lasts up to a week.
Available at the end of the month, the Fossil Q Founder is a connected watch with display that utilizes Android Wear, and is one of the first digital display watches to offer full compatibility with virtually all smartphones. This product allows the wearer to customize their watch face, as well as other features while utilizing the Fossil Q app.
The Fossil Q app allows the company to uniquely interact with customers, provides functionality like smart notifications and allows customers to learn more about themselves, from tracking physical activity to counting calories and can connect seamlessly to other fitness apps that customers might already be using.
"The exciting thing about the app is the opportunity to eventually carry the functionality across the brands in our licensed portfolio and create a unique specialized branded experience for the customer," said Kartsotis. "This will enable brands such as Michael Kors and others to compete in the connected accessories category and to attract new customers."
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