Apple's relatively nimble retail footprint will play a crucial role in selling Apple Watch. Mark Gurman over at 9to5Mac reported yesterday that Apple is planning on setting up Apple Watch demo areas where 10 customers can receive personalized 15-minute demos. I suspect a decent number of Apple Watch pre-orders will likely take advantage of Apple's offer, and get a demo/fitting, since choice and comfort are important watch elements. It is conceivable that over the two week preview period starting April 10th, including launch day, Apple will be able to give more than two million Apple Watch demos, which will not only help drive a successful product launch, but begin the process of explaining the device to hundreds of millions of customers.
The Apple Watch will launch in nine countries (a record for a new product category launch):
- US (265 Apple retail stores)
- UK (38 stores)
- Canada (29 stores)
- Australia (21 stores)
- China (18 stores)
- France (18 stores)
- Germany (14 stores)
- Japan (8 stores)
- Hong Kong (3 stores)
The only countries to have more than three Apple retail stores and not make the initial launch list are Spain, Italy, and Switzerland (no surprise there). It would seem obvious that Hong Kong's proximity to China was a much more important factor than store count. Therefore, the Apple Watch launch country list is essentially the top countries within the Apple retail network, reinforcing the idea that Apple is positioning the demo as key to selling the device.
Exhibit 1 takes a look at the number of Apple Watch demos that I estimate could be given at each Apple retail store per hour, starting at 40 for the typical small Apple store in a mall to over 150 for a hi-profile store. The various store types are based off of store footprint estimates from Gary Allen of ifostore. Gurman's report indicated each store will receive one Apple Watch demo table, with the ability to have more tables dependent on demand. I am assuming some medium/large Apple stores in mall and non-mall locations will indeed get additional demo units (reflected in the 1.5 Apple Watch demo table figure in Exhibit 1), while hi-profile stores get four tables to handle higher demand.
Exhibit 1: Theoretical Number of Apple Watch Demos by Store Type
Exhibit 2 takes the per store data from Exhibit 1 and expands it for the entire preview period across the retail footprint. It is conceivable that Apple will be able to give 22,000 Apple Watch demos per hour, leading to nearly 180,000 demos a day and over one million demos a week. Of course, school and work patterns during the week will likely result in Apple giving fewer demos than these totals, but the takeaway is Apple's built-in capacity for giving such a large number of demos. During the entire preview period from April 10th to April 24th, including launch day, Apple may be able to give upwards of two million Apple Watch demos.
Exhibit 2: Theoretical Number of Apple Watch Demos by Store Type During the Preview Period
Earlier this week, I established my Apple Watch sales expectations, including a 2.5 to 4.5 million unit sales estimate range for opening weekend. I feel more comfortable that Apple will be able to ship at least one to two million units for opening weekend as consumers will have had the opportunity to experience the watch during a demo and place an order. My estimate then assumes additional sales from in-store demos on launch day.
Many observers are underestimating the impact that a 15-minute demo will have on selling Apple Watch. Those interested in an Apple Watch will likely already own an iPhone and be familiar with the Apple ecosystem. The sales pitch will not look to answer "why Apple?" but instead focus on "here's what you can do with this watch." That message is difficult to get across in traditional advertising, so the ability to offer an in-store demo and control the entire sales message, will go a long way in selling Apple Watch to these early adopters.
The importance of a demo and the broader sales environment can also be seen from the way Apple Watch is displayed in stores compared to that of an Android Wear smartwatch (shown below). Apple's "glass-topped Apple Watch display cabinet, accessible to staff from below, via a descending, motorized flap, like the ramp at the rear of a cargo plane," as Ian Parker described it in his Jony Ive profile published last month, helps to build an experience around the device that will go a long way in nurturing desire. Simply opening retail stores is only the beginning in being able to create the right kind of atmosphere that is conducive to brand building and strong sales on a square footage basis.
Apple retail was one of the key reasons that the iPad became a phenomenon. Once customers held the device, and were able to experience software that allowed the hardware to melt away, the sale was made. I have a feeling the same will occur with Apple Watch as the demo will go a long way in turning interest and curiosity into a sale.
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