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The Apple Watch debut marks a new retail strategy for Apple

April 24, 2015 11:07 AM
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(Bloomberg) -- The Apple Watch goes on sale in stores Friday. Whether you can just walk into an Apple Store and buy one is another matter.

The debut of Apple Inc.'s first new device in five years is looking more like an event from the fashion world rather than the tech world. This time, there won't be long lines of faithful gadget lovers waiting for hours and days to buy the latest product from the Cupertino, California-based company.

Paris's Colette, London's Dover Street Market and Tokyo's Isetan are among the high-end department stores joining the global rolloutof the Apple Watch, which ranges in price from $349 to $17,000 for a gold version. Those shops, plus an undisclosed number of authorized resellers, may be the only places where people can actually buy the new smartwatch. Apple Stores are only showcasing the device, and the company is urging customers to place orders online.

"Classic fashion industry play," Howard Feller, a partner at MMG Advisors, an investment bank that specializes in retail, jewelry and fashion, said of the Apple Watch introduction. "Every one of those locations are where trends are set, where new brands are introduced and where the customer who is absolutely hyper sensitive to the latest fashion trends will go to see what's new for the season. Everything from the fashion world trickles down from there."

Angela Ahrendts, Apple's retail and online sales chief, has directed staff across eight countries and Hong Kong to send shoppers to its website to buy the device, which has a touch- screen display and works in tandem with an iPhone for messaging, directions and other applications. Initially, the AppleWatch won't be available in Apple Stores for purchase on the first day, she said in a videothat emerged this week.

"The Watch is an entirely new category," Ahrendts told staff in the video. "It's much more personal with all of the different options. We really wanted the customer to work with you so you could guide them, take the time to get the one they wanted and by doing it online we could make sure that we get them the best service and the one they want the most efficiently."

Customers have been able to schedule demonstrations of the watch in Apple Stores since April 10, when online pre-orders began. The first batch of deliveries should begin arriving Friday. Shortly after Apple began accepting early orders, shipment times quickly pushed passed that date with some customers being promised delivery in four to six weeks or into June. Other buyers began receiving messages this week informing them that the watches were shipping earlier than expected.

"Our team is working to fill orders as quickly as possible based on the available supply and the order in which they were received," Apple said in a statement this week. "We know many customers are still facing long lead times and we appreciate their patience."

The Apple Watch rollout is part of a bigger strategy to make the gadget more appealing to the fashion world. To that end, Apple bought a large advertising spread in the March issue of Vogue, displayed the device at the Colette during last fall's fashion week and hired a slew of fashion-industry executives, including Ahrendts, the former chief executive officer of Burberry Group Plc.

Other high-end stores selling the watch Friday include The Corner Berlin and Maxfield in Los Angeles, which appears to be the only store in the U.S. to get the watch. "There's an Apple Watch for you at Maxfield," the boutique says on its website. "We've handpicked a range of models to help you find a look to complement your own.''

The watch has also been previewed at other high-end stores, such as Galeries Lafayette in Paris, which sees more than 50 percent of its traffic from Chinese and international tourists, according to Erinn Murphy, an analyst at Piper Jaffray Cos.

"In some of these cities, whether it's Paris or London, you've got an incredible amount of global tourists shopping as well," Murphy said. "It helps reinforce the brand globally."

Sales of the Watch may reach almost 14 million this year, according to the average estimate of five analysts polled by Bloomberg. At Dover Street Market, appointments are required and purchases are limited to one per customer. "We kindly ask you not to queue," the company said on its website.

At Isetan, located in Tokyo's Shinjuku shopping district, the Apple Watch display is located on the ground floor where jewelry and cosmetics are sold, near Cartier and Prada.

"The concept of Isetan Shinjuku is the best fashion museum in the world," said Makoto Yamada, a spokesman for Isetan Mitsukoshi Holdings Ltd. During a recent afternoon, a young couple, a young business man and a mother with her baby could be seen trying on the watch. Through April 26, however, Isetan is only selling watches to customers who reserved them in advance, according to its website.

"They're going after the top because of the trickle-down effect," said Robin Lewis, CEO of The Robin Report and co-author of The New Rules of Retail: Competing in the World's Toughest Marketplace, which explores Apple's retail strategy. "Scarcity just creates greater, more intense demand."

 

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