Fossil CEO Cites Importance of Wearables

Kors brand on wearable technologies and is in talks with all its brands “about the appropriate time to bring out some products,” he said. Fossil's other brands include Burberry, Diesel and DKNY. Kartsotis sees wearables as a key element in company strategy as it looks to leverage its fashion position “to become the point where fashion, design and technology converge.” He said Fossil is working with Google and Intel (see 1501080038) on the electronics side, and wearables are a part of the company’s long-term vision. “Someday, every watch we make could have some type of technology in it,” Kartsotis said. “I expect at some point all our watches will have enhanced technology, whether it's sensors, communication,” he said, and an app community also could develop around its platform. The watch business is just a small percentage of “the huge amount of spending” taking place in technology, including phones, iPads and service plans, Kartsotis said. If just a small percentage of the total consumer technology spending moves into the watch business, it could have “a dramatic impact on the growth of the category and make it more relevant,” he said. “We are sitting right in the middle of something that could be much larger.” Fossil is hoping for a receptive market in millennials who “largely have grown up without watches” and believes connected technology can make a watch “more relevant to their lives,” Kartsotis said. “They had a cellphone when they grew up” and didn’t necessarily wear a watch, he said. “With the branding and technology coming into play, we think we've got a big opportunity.” Investing in wearables enables Fossil to leverage its global platform, which includes numerous brands and 30,000 points of sale worldwide, Kartsotis said. He referred to the company's "mindshare" in the market and said Fossil can "make great-looking products that have an emotional attachment to customers that love brands but also have a little extra functionality." The plans extend beyond watches. "We are looking at both display items like smart watches but also non-display items like jewelry and potentially bracelets," he said. Eventually, connected technology "will probably impact all brands," he said. Speaking on the economics of wearable technology, Kartsotis said one of the “exciting things” about wearables is that “as technology gets better, battery life is going to be better … functionality is going to be better and the economics will be better because as the quantities grow, then the costs, etc., come down pretty quickly. So that's partly why we think it's a very compelling long-term opportunity.”