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Upscale brands take smartwatches up a tick

The Apple Watch Hermès, among the first luxury wearables, is at the top end of the smartwatch category, which is expected to grow to $33-billion (U.S.) in sales globally by 2020.

Stephen Lam/Getty Images

Noticing the exploding sales of smartwatches, luxury brands such as Hermès, Louis Vuitton and Kate Spade have decided it's time to get in on the action in the mass-market wearables category.

In 2015, Hermès partnered with Apple to launch a co-branded Apple Watch Hermès. There are now six hybrid designs from the posh French brand, the cheapest of which costs $1,579 (U.S.). The most expensive is more than $2,000.

A regular Apple Watch starts at $359, which means if you want a Fauve Barénia leather strap and an Hermès-branded watch face, you'll have to fork out nearly five times the usual price.

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But customers seem okay with the price, as the luxury consumer is not overly cost-conscious to begin with.

"I'd suggest luxury brands would drive wearables the way Tesla advances the cause of the electric car," says Sandra Robinson, an instructor at Carleton University in Ottawa whose area of expertise includes software design and algorithms.

The Hermès and Apple union has been described as a marketing coup, among the first examples of a high-brow spin being put on a "geek" product.

But with the market for smartwatches set to reach approximately $33-billion globally by 2020, and with Swiss watch exports falling (they were down almost 10 per cent year over year in 2016), it makes sense for luxury brands to jump into the fray for their share.

Tracey Lauriault, Dr. Robinson's colleague at Carleton and an assistant professor in big data and critical data studies, says she's not surprised many luxury manufacturers are interested in the wearables space. There's an opportunity, she says, to quantify parts of a user's everyday life – where they eat, when they work out and so on – and that data could be integrated into luxury-type tech products.

"It's an interesting kind of integration between product manufacturers and technology companies and platforms. It's an extension of the convergence of multiple types of luxury products."

Dr. Lauriault says entering the wearables space gives luxury brands the opportunity to engage with their consumers just like the less-expensive brands and take advantage of the data consumers provide while using them.

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"If I was one of these luxury [companies], then there is no better way to collect data about your target market than to specifically target them with a product and track where they go, what they do, what they're eating, and more," she explains.

"Perhaps people who would normally not travel the shelves of Best Buy to wear a device that looks like a rubber band would suddenly consider collecting their data in this way because they're wearing a device that meets their aesthetic needs and what they like."

Just as Hermès partnered with Apple, its French fashion rival Louis Vuitton joined forces with Google to produce the Louis Vuitton Tambour Horizon smartwatch.

"We asked Google to personalize the experiences with Android Wear so that everything would speak the language of Vuitton," Hamdi Chatti, Louis Vuitton's vice-president for watches and jewellery, told Bloomberg News in July.

The watch is meant for the "globetrotting elite" and looks indistinguishable from Louis Vuitton's regular Tambour watch. It notifies wearers of phone calls, text messages and e-mails, and it includes features aimed at upscale travellers, such as a flight tracker and a guide to destination landmarks.

"What's distinctive is that it's not technology informing aesthetics, it's the reverse: Beauty informs technology," Michael Burke, chairman and chief executive officer of Louis Vuitton, told Forbes. "We don't want it to look like a connected object, we want it to look like a mechanical watch."

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Marc Saltzman, a syndicated technology columnist and author of Apple Watch For Dummies, says it's no surprise to see luxury companies entering the wearables space, and the partnerships are equally unsurprising.

"History has shown over and over again that if you don't pivot and embrace new trends, you're just going to be less relevant," Mr. Saltzman says. "When one partnership is inked and everyone knows about it, the other company scrambles. It's always a race. Tech is super hot right now, but we're just in the early days of smartwatches. It's like we're in the Model T days."

While both the Apple Watch Hermès and the Louis Vuitton Tambour Horizon are largely focused on the male consumer, brands such as Tory Burch, Michael Kors and Kate Spade are connecting with their female clientele in new ways, too – especially as the economic impact of female consumers continues to increase year-over-year, with the global income of women predicted to reach $18-trillion next year, according to Ernst &Young.

Tory Burch has formed a partnership with Fitbit to create a more jewellery-like bangle edition of Fitbit's venerable fitness tracker, while Michael Kors has a line of smartwatches for both men and women that are about $100 more than their regular watches.

Kate Spade, a U.S. fashion design house worth approximately $2.5-billion, is at the forefront of developing wearable tech for female consumers, and has launched over the past year-and-a-half a lineup of "fashionista friendly" wearables, including fitness trackers and more.

Although he admits he is painting with broad strokes, Mr. Saltzman says women, for the most part, don't fall for gadgets the way that male consumers do. Thus it's taken this long for a luxury brand to put out wearable tech that appeals to women.

"Women tend to wear jewellery that includes pendants and rings and bracelets and there is an opportunity to combine fashion and function because women wear more than just watches," he explains. "They want to accessorize and guys usually just wear one watch and put that same watch on all the time."

It all adds up to an expected growth area. "I think there are more opportunities for both tech companies and fashion designers to embrace wearables," Mr. Saltzman says.

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