India’s wearable market sees decline with 10% drop in shipments

India’s wearable market saw its first decline in Q2 2024, with a 10% drop in shipments largely due to inventory issues and limited innovation. Smartwatches experienced the steepest fall, down 27.4% year-on-year, as oversupply and lack of new features reduced demand.

India’s wearable market has hit its first-ever decline, according to the International Data Corporation (IDC), showing a 10% year-on-year decrease to 29.5 million devices in Q2 2024. The smartwatch segment has been particularly affected, with sales dropping a sharp 27.4% annually to 9.3 million units. IDC attributes this downturn to a range of challenges, notably an oversupply of inventory and a lack of substantial innovation that would otherwise drive consumer demand.

This report marks a pivotal shift in the wearables market, breaking its consistent growth trend. In the smartwatch category, which was previously the growth leader, market share has dropped significantly—from 39% of the total wearables market in Q2 2023 to just 31.5% this year. Analysts suggest that the market’s downturn reflects a disconnect between consumer expectations and industry offerings; outdated models with fewer new features have failed to maintain consumer interest, leading to a surplus of unsold stock and impacting overall market growth.

Industry leaders and analysts also note that while audio wearables, like wireless earphones and headsets, continued to see moderate growth, largely supported by affordable options, the smartwatch category was severely impacted. This has led India’s leading wearable brand, Boat, to consider exiting the smartwatch segment altogether.

The festive season, typically a high point for consumer electronics, failed to uplift the sector this year, with its underwhelming performance now visible in the financial results of major brands. Boat, backed by Warburg Pincus, saw its revenue slip in FY24 even as it managed to reduce losses by 48%. Meanwhile, competitor Boult saw its revenue grow 40% to nearly Rs 700 crore in FY24, but profits were halved due to increased investments aimed at driving growth.

In FY24, Boat experienced a 5% revenue drop to Rs 3,122 crore, although it reduced net losses by nearly half, settling at Rs 70.8 crore. Boult’s revenue gains were driven by new category expansion and an increased focus on offline sales channels. As Boult’s founder and CEO, Varun Gupta, explained to ET, “As we engage in many new activities – like scaling up a completely new category, smartwatches, which was a degrowing category but one we managed to grow – the bottom line naturally shrinks.” To support these efforts, the company invested Rs 162 crore in marketing in FY24, a substantial 74% increase from FY23, primarily to fuel its offline retail strategy.

“During this festive period, India’s smartwatch sales have remained sluggish, extending the downward trend from the previous quarter,” noted Anshika Jain, senior research analyst at Counterpoint, stated to ET. Jain anticipates a double-digit annual decline for the category due to “limited discounts and changing consumer behaviour.” She also foresees a 30% reduction in smartwatch shipments for the September quarter, adding that “Consumers are not replacing smartwatches as quickly as the industry had anticipated,” resulting in inventory pileups. However, premium smartwatches are faring better, with models from Samsung and Apple—particularly older ones with discounts—showing growth potential in this segment.

Audio wearables, on the other hand, have seen steady demand as companies introduce advanced features like active noise cancellation in products priced below Rs 2,000, appealing to price-sensitive customers, according to an anonymous Gurgaon-based industry executive.

In the true wireless audio segment, Boult recorded a 25% growth, making it the company’s largest category. Its expanding footprint, now spanning over 2,000 retail outlets, has also contributed to growth. “Apart from organic growth in our core audio portfolio with key marketplaces, this year will also include quick commerce, which is helping us increase the pie size, making it an additional source of revenue for us,” Gupta noted. Counterpoint’s Jain also confirmed the growth in the true wireless audio market, with shipments through quick commerce channels doubling sequentially in the September quarter, representing a remarkable 10-fold increase year-over-year.