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James Martin/CNET
SAN FRANCISCO — I wind my way through the Apple Store in downtown San Francisco, dodging dozens of animated shoppers. A sales associate greets me and escorts me to a private, white-walled conference room in the back that’s decorated with posters of Apple products like iPhones.
I’m preparing to try on the $17,000 Apple Watch Edition, the most expensive version of Apple’s first wearable. Though I’m unconvinced I’d ever be willing to spend that much on a wrist-worn computer, I’m eager to see what the 18-karat gold watch looks and feels like — and how Apple’s retail stores, accustomed to hawking phones, tablets and computers, will handle the sale of such a luxury product.
What I do is wait. And wait.
And wait.
I wait for the saleswoman to tell her colleagues outside the room which size and models of the Apple Watch I’ve asked to see. Only two of the yellow and rose gold watches are allowed out of the safe at a time, I’m told. So I wait for security to remove the two 42 mm (1.7-inch) Apple Watches left in the room by the previous customer, and then I wait some more for the arrival of the 38 mm (1.5-inch) models I think I’d like better.
I also wait for answers on how features work, and I wait for a sales pitch on what I can actually do with the Apple Watch. It never comes.
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And now, even if I had the money to drop on the solid gold watch, I’d be waiting for weeks, if not months, to get my hands on the model I want. Apple earlier this week updated some consumers with news their Apple Watches would arrive sooner than expected, but it acknowledged that “many customers are still facing long lead times.” At best, Apple says a watch ordered today will arrive in mid- to late May. Worst-case scenario, I’m looking at July for some models of Apple Watch, including the $1,099, 42-mm space black version with the stainless steel link bracelet.
For some customers who pre-ordered the device when it went on sale April 10, Apple’s first smartwatch will be delivered starting Friday. The expectations are high for the gadget and what it may do to fuel the wearable device market. Some analysts estimate more than 2 million Apple watches were preordered in the two weeks leading up to the April 24 launch. All other smartwatch vendors combined shipped only 4.6 million devices in all of 2014, according to Strategy Analytics.
The Apple Watch rollout is a major test for CEO Tim Cook, who needs to show that the company can still create lust-worthy, must-have products in new categories. That last time it did that was in 2010 with the “magical” iPad tablet, which was ushered to market by Apple co-founder Steve Jobs before he died the following year. Jobs also moved Apple, originally known as the maker of the Macintosh computer, into the smartphone market with the iPhone in 2007. Cook has said that Apple began work on the smartwatch after Jobs’ death in October 2011 and that he considers it the “most personal device” the Cupertino, Calif., company has ever created.
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The watch is also the first major test for Angela Ahrendts, who marks her first year as head of Apple’s online and in-store retail stores next week. Apple hired the 54-year-old away from her role as Burberry CEO in late 2013, with Cook touting her as a “wicked smart” leader who led her former employer company “through a period of phenomenal growth with a focus on brand, culture, core values and the power of positive energy.”
The challenge for Ahrendts comes in making the often-chaotic Apple Store environment feel like a premium shopping experience. And it’s about making everyone, even the people forking over a mere $349 for an Apple Watch Sport, feel like they’re special.
“The Apple Store ‘come in and play’ experience has been crucial for Apple’s success over time,” said Carolina Milanesi, chief of research and head of the US business at Kantar Worldpanel. “I would hope this will not change as it is the best PR that Apple can buy.”
Apple declined to comment or to make Ahrendts available for an interview.
Ahrendts’ ambitions
An Apple Store tends to have a better consumer experience than consumer electronics retailers like Best Buy, with peppy, iPad-toting sales reps eager to guide you through the store and handle your sale. But it’s no Burberry or Tiffany.
Over at Burberry, a five-minute walk from the Stockton Street Apple Store, there’s no chaos or crowds. There’s also no wait. An attentive sales associate appears at my side when I need her. Music plays lightly in the background, and everything about the store screams luxury. I can try on any watch I want (who knew Burberry sold watches?), and I don’t even have to wait for the timepieces, many of which cost about the same as the stainless steel Apple Watch, to be delivered by a security guard.
Enlarge ImageShara Tibken/CNET
At high-end jeweler Tiffany, located just up the street, I’m invited to try on a $190,000 diamond-encrusted Patek Philippe watch, no wait, no hassle. I opt instead to put on one that costs closer to $50,000.
At Apple, I waited. At Burberry and Tiffany, I was waited on hand and foot.
Ahrendts was tapped to lead the stores after Apple struggled with its retail operations. In addition to his day job as CEO, Cook led the retail business for more than a year after he fired retail chief John Browett in October 2012 after just six months on the job. Browett, former chief of British electronics retailer Dixons, admitted he didn’t fit in with Apple’s culture. Browett replaced Ron Johnson, the executive credited with much of Apple’s retail success, after Johnson left in 2011 to become J.C. Penney’s CEO. (Johnson was ousted as Penney’s chief in April 2013 for what some deemed a misguided makeover of the budget-minded retailer.).
Apple makes more money per square foot in its stores than any other US retailer — including Tiffany & Co. — but its retail sales haven’t grown as fast as they used to. In Apple’s fiscal 2014, which ended September 27, retail sales rose only 6 percent to $21.46 billion, on par with the 7 percent rise in 2013. It’s a much lower growth rate than the 33 percent increase seen in 2012, 44 percent in 2011 and 47 percent in 2010 — despite Apple opening more stores. It now has more than 400 retail outlets worldwide.
Some say the novelty has worn off, with Samsung and Microsoft successfully mimicking the Apple retail feel.
Apple knew it needed someone focused on retail, and that’s where Ahrendts came in. She’s the first Apple executive to oversee both Apple’s physical stores and its online store. The hope is that she can pull off the same trick she achieved at Burberry. After Ahrendts took over at the London-based clothing and accessories retailer in 2006, Burberry’s sales nearly tripled to about $3.9 billion in the year ended March 31. Today it’s widely regarded as one of the most technologically savvy fashion brands in the world.
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Ahrendts hasn’t made any changes noticeable to consumers in her first year on the job at Apple, besides the obvious tweaks for Apple Watch — adding new displays in stores, installing safes to store the pricey gold watches and forming partnerships with department stores such as Paris’ Galeries Lafayette to show off the device. The real shift will come later this year and in 2016, analysts say, when Ahrendts could dive into redesigning Apple’s stores and figuring out how to get retail sales soaring again.
“The first year was about understanding Apple’s culture as well as understanding how Apple works,” said Tim Bajarin, president of tech research firm Creative Strategies. “I don’t think we’re going to see any real significant outcome from her work at Apple for probably at least another 12 months.”
Even then, it could be tough to gauge Ahrendts’ success in turning Apple Stores around. Apple in October said starting this year, it won’t break out retail sales. Instead, store results will be distributed among the various regions (such as Americas and Greater China).
It’s also not going to say how many watches it’s sold, lumping sales of the device into the “other products” category on its earnings statement along with iPod music players, Apple TV and accessories including Beats’ headphones.
Apple Watch rollout
Cook needs the Apple Watch to be a winner not because Apple needs the money — sales of the iPhone and iPad accounted for 81 percent of sales in the December quarter. Instead, company fans — and critics — are looking to how well the Apple Watch does as a sign of whether Cook and his team are still innovative without Jobs’ influence over product design.
Last year, smartwatch vendors shipped just 4.6 million units, compared with 242 million tablets and 1.3 billion smartphones. Strategy Analytics believes Apple will ship 15.4 million Apple Watch units in 2015, giving the company 54.8 percent of the global smartwatch market and bumping Samsung to No. 2. The Apple Watch could help raise awareness for other watches, bringing total smartwatch shipments this year to 28.1 million.
But heady sales for the Apple Watch, which works only with the Phone 5, 5S, 5C, 6 and 6 Plus, aren’t a foregone conclusion. Apple, which kept its product lines streamlined in the past, offers 38 possible combinations of watch bands, models and metal finishes, giving consumers plenty of options to find the devices that best match their styles.
That’s led to a more complicated sales process than Apple has ever had to handle before. This is the first time Apple has let consumers see and touch a device in a store before it goes on sale by scheduling fittings. And because it’s a new product, Apple wants to make sure consumers are comfortable with their choice.
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It’s also being sold in a different way. Consumers won’t be able to walk into an Apple Store to purchase an Apple Watch like they can with the iPhone and iPad . Instead, all sales will be made through a reservation system. And that’s true for the indefinite future. Apple has no plans at this time to allow consumers to stop into one of its store and walk out with an Apple Watch. That means there won’t be the long lines common with every iPhone launch over the past few years — unless you go to one of the luxury boutiques that now sells Apple Watch.
While you can’t buy Apple Watch in Apple Stores, you will be able to purchase and walk away with the device on Friday in certain luxury boutiques around the world, including Colette in Paris, The Corner in Berlin, Dover Street Market in London and Tokyo, Maxfield in Los Angeles and certain Apple authorized resellers in China and Japan. The decision to let boutiques offer their watch inventory in-store — instead of just online — is another sign of Apple’s quest to sell Apple Watch as a fashion piece, not just a gadget strapped to the wrist.
Would-be Apple Watch buyers started lining up at Maxfield at 8 a.m. PT on Thursday. By 7 p.m., about 30 people were waiting for the store to open at 9 a.m. Friday, two hours earlier than normal.
Selling so many models has presented some challenges for Apple’s production line, as well as for its sales associates. During fittings that started at Apple Stores April 10, many associates didn’t know answers to simple questions, such as how much a particular band cost.
Supply shortages seem to also be more severe than with other product launches — including last year’s iPhone 6, which saw higher demand than any other product in Apple’s history.
“This is the most controlled launch of any product we’ve ever seen,” Bajarin said. “This was a supply chain question. Creating watches in huge volume, at least in the beginning, is a lot different than creating iPhones in huge volume eight years after it [was introduced].”
Enlarge ImageAshley Esqueda/CNET
Apple also has kept many people guessing about when their preordered watches will arrive. Many Apple fans have turned to online community site Reddit to complain about constantly checking their email for shipping updates.
“I’m pretty confident it’ll ship and be here by Friday, but I still have that irrational little voice in my head that says, ‘Hey! I ordered by 12:02! Why are all these watches shipping before me!” said user “swemoney” on Wednesday.
And user “roldham” said, “This is killing me!”
Apple, a company used to extreme secrecy, hasn’t been forthcoming with information on how to get a watch. Its marketing materials have been somewhat confusing, initially saying nothing about having to order online. The site earlier said the Apple Watch would be available April 24, but Apple changed its message a few days after preorders started to simply say “The Watch is coming.” It also hasn’t been actively publicizing which department stores will carry the device Friday.
“The devil’s in the details here, and Apple’s not been a company that tends to communicate with customers about details,” said Jan Dawson, chief analyst at Jackdaw Research. “Because the process is so new, it’s taking people by surprise.”
The lack of information has already left some customers confused. Julie Mickelson stopped by a Palo Alto, Calif., Apple store on April 10 to purchase the Apple Watch. She didn’t realize she couldn’t actually buy the device and take it home that day but could only sign up for a fitting and preorder the watch online. “I just wanted to buy it,” she said.
Mickelson likely won’t be alone in leaving an Apple Store disappointed and empty handed. Ahrendts, Cook — and the rest of Apple — have to hope the confusing process doesn’t prompt consumers to walk away for good.
After all, there’s no wait at Burberry.
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