Apple has finally released more details about its hotly anticipated line of smartwatches and how it plans to sell them.
While the entry-level Apple Watch Sport starts at $349, the luxury Apple Watch Edition will go for $10,000 or more.
The company's first foray into wearable tech could also have ramifications for their iconic retail stores, and there has been much speculation about how the stores may be redesigned to attract buyers to the luxury version of the watch.
The current setup of open space, bare wood floors, and communal tables doesn’t provide the discretion and exclusive air that buyers of expensive timepieces expect. In a recent New Yorker profile by Ian Parker, Jony Ive, Apple’s design guru, hinted that the company could designate a VIP room for luxury customers. Parker tells how Ive overheard a man saying, “I’m not going to buy a watch if I can’t stand on carpet.” Apple appears to be making such moves. According to a report by the Wall Street Journal, Apple is considering redesigning its stores to include an area wher customers can try on the shiny new watches by appointment.
"If they really want to think of that luxury experience, they may think about setting it up more as an upscale jewelry shop," says Barbara Kahn, a professor at the Wharton School of the University of Pennsylvania and director of its retailing center. Apple would need the appropriate lighting to showcase the fancy goods, wholly personalized service, and private spaces to try out the watches.
New Product Announcements At The Apple Inc. Spring Forward Event
Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Inc. Spring Forward event in San Francisco, California, U.S., on Monday, March 9, 2015.
Photographer: David Paul Morris/Bloomberg
That would mean amending a formula widely considered to be retail's best in class, as Apple stores rake in more sales per square foot than any other retailer—including such luxury stalwarts as Tiffany and Michael Kors. Rather than piling stacks of products on shelves, Apple presents lots of open space, with tables to test out its computers and gadgets. Flashy gadgets such as the iPod and iPhone draw customers through the glass frontage of Apple stores, and product launches and store openings become spectacles, with armies of employees ready to cheer on those willing to brave lengthy lines. Copycats popped up as Microsoft and Samsung Electronics scrambled to duplicate Apple stores' style and success.
High-end fashion, like the priciest Apple watches, require a much higher level of service to attract luxury customers, says Sebastian DiGrande, who leads the tech, media, and telecom practice at Boston Consulting Group. In the luxury environment, for instance, sales assistants help you throughout the process and follow up personally after the purchase. Associates need to match products with each shopper's personal style, an unpredictable and nuanced process. “It’s more about the navigation to something that suits someone’s style, that connects with their emotional interest and develops a relationship,” he says.
When customers buy a traditional watch, they generally compare timepieces from different brands. That won’t be the case with the Apple Watch, which will vary only in memory, materials, and bands. “Communicating more about what the differences are is particularly important,” says Tim Kobe, the chief executive of design studio Eight and a close collaborator with Steve Jobs on the first Apple stores. “Enhancing those distinguishing characteristics is important in the category.”
The company has already begun training its retail employees to steer the Apple Watch’s early adopters to the more premium watch options, according to a document obtained by the Apple-centric blog 9to5Mac. Employees are advised to recommend a version of the watch based on a customer’s personal style, ascertained through such questions as, “Are you looking for a watch that’s more casual or formal?”
The same document also suggests the continued emphasis on selling accessories in Apple’s retail strategy. Apple will sell many different band options at launch, allowing customers to buy a watch from a collection and buy a different band separately to mix and match depending on their fashion preferences. According to 9to5Mac, Apple is mulling an online retail program for customers to reserve a custom watch-and-band pairing before picking it up in a brick-and-mortar store.
The company is also planning to set up new glass-covered Apple Watch display tables similar to those at the device’s unveiling. For the gold model, employees are expected to use a special iPhone app to unlock the table, enabling customers to try on the more expensive watch.
Then there's the matter of selling through partners, such as luxury-watch sellers and department stores. It’s planning to showcase and sell the watches at swanky department stores in major cities like Selfridges in London, Galeries Lafayette in Paris, and Isetan in Tokyo, along with some high-end boutiques. Luxury brands typically exercise great control over how their wares are sold in other retailers' shops, and the whole experience— from how the items are displayed to what employees are expected to say to customers—is carefully edited and corrected by the company. "I imagine Apple will be demanding as well," says Kahn.
Ahead of the launch, Apple hired a formidable team of executives from the fashion and luxury industries to shape its retail strategy. Angela Ahrendts, the much-heralded former CEO of luxe fashion house Burberry, came on board last year as the new head of retail, tasked with revamping the overall Apple store experience and figuring out how best to sell Apple's new glossy watches. She has already made tweaks, such as outfitting Apple store workers in new attire—crew neck tees or polos with the Apple logo on the left breast. The company also poached executives from Tag Heuer, Louis Vuitton, and Yves St. Laurent Group.
Since 2011, Apple had a hard time finding a replacement for Ron Johnson—the former Apple retail chief who masterminded the Apple store design alongside Steve Jobs—after he left for an ill-fated tenure as CEO of J.C. Penney. Apple brought on John Browett as Johnson's successor, but he lasted only about nine months before being pushed out, and the role remained empty for two years until the Ahrendts hire. Apple CEO Tim Cook clearly sees Ahrendts as key to developing a winning formula, awarding her $73.3 million in compensation, boosted by a generous sign-on bonus, which dwarfs his own salary package of $9.22 million.
updat 5:22pm: Updated to include department store partners that will sell Apple Watch
