Along with periodic Above Avalon posts, I send out a daily email about Apple to members (10-12 stories per week). The following story was sent to members on July 28th.

Apple Watch is Coming to Best Buy

The Apple Watch continues to throw us curve balls. The latest is courtesy of a Best Buy press release:

"The Apple Watch, one of the year's most talked about and innovative products, is coming to Best Buy.

Starting Aug. 7, Best Buy will be the first national retailer, other than Apple Stores, where customers can buy the Apple Watch. It will begin to arrive in more than 100 Best Buy stores and will also be available on BestBuy.com. Another 200 of our stores will have the Apple Watch in time for holiday shopping."

The first thing to note is the relatively slow roll-out. Even though August 7th is next week, it sounds like it will take some time for Apple Watch to be in the first 100 stores. The U.S. holiday shopping season is still four months away, and there are 1,050 Best Buy stores in the U.S. For there to be only 300 stores to have the Watch by November suggests that there will likely be special Watch display areas set up in the Apple areas within Best Buy stores. Will Apple utilize Watch display tables similar to the ones in Apple retail stores or will Apple build special (smaller) tables just for Best Buy?

It's clear we should expect the Watch to be sold in a refined way, even at Best Buy. That is one reason why the Apple Watch display tables are so great, representing a new take on how luxury watches are displayed to the public. Traditionally, you think of a watch display case in a Bloomingdale's where dozens of watches are packed together in glass cases. In terms of other smartwatches, the display method is nothing short of a mess with some Android Wear devices attached to tables like a pen chained to the table at a bank.

Best Buy detailed the Watch models that will be available in its stores: "[C]ustomers will be able to see, try and buy 16 Apple Watch models - including Sport and Watch models in both 38mm and 42mm sizes - and nearly 50 accessories, including watch bands, screen shields, stands, chargers and more."

Does "try on" mean I would be able to wear the Watch or simply play with the device while it is stationed to the table? There are still questions left unanswered.

The much bigger stories here are the expanding Watch retail distribution and the delicate balance Apple has to manage between selling luxury and premium mass-market items.

Apple Watch is currently sold in 266 Apple retail stores in the U.S., so this Best Buy deal effectively doubles the retail presence in the U.S., which should not be underestimated. It's important to remember that there are millions of people that don't live near an Apple store and have not had the opportunity to see or play with Apple Watch. I would expect other retailers to sell Apple Watch in time for the holidays as Apple management stressed that key shopping time frame on last week's earnings call.

Over the past few weeks, because there has been so much attention given to whether the Apple Watch has been a flop or not, many have forgotten that Apple is now a premium mass-market luxury brand. By selling Watch models ranging from $349 to $17,000, Apple needs to rely on a particular kind of retail strategy in order to not alienate certain customers.

As I wrote a few months ago, the answer seems to be segmenting the Sport and Watch models from the Edition. Such segmentation makes it possible to sell the Sport and Watch in more mainstream retailers while not hurting the appeal of the Edition, or at least that would be the theory.

Here's a snippet from a post I wrote back in March titled, "The New Apple: Embracing Personalized Technology with a Luxury Twist":

"Even though Apple has mastered the art of selling mass-market goods at premium prices, catering to a luxury clientele comes with new risks, including alienating core users who may be turned off by management's focus on the high-end at the detriment of the 'low-end'...There will likely be very few instances of $349 Apple Watch Sports being sold next to $17,000 Apple Watch Editions."

We are in unchartered territory, not just because we are talking about a personal luxury tech gadget, but because Apple is actually pushing a different kind of luxury with all of the watch models having the same fundamental functionality, the only difference being aluminum, stainless steel, and gold watch cases.

While some may poke fun at Apple Watch being sold at Best Buy, in reality the decision makes perfect sense and will not hurt the luxury image that Apple is going after because of the Watch collection segmentation that is present.

Along with the preceding story, the full list of stories sent to Above Avalon members last week included:

Apple Talked with BMW About Electric Cars
The Unknown Tablet Market
Elon Musk is Experimenting (with electric car retail)
I Saw My First Apple Watch in the Wild
New Apple Watch Ads
Apple Music Subscriber Numbers
Apple Music's Problem
Motorola's New Phones
Why There's Nothing Quite Like iPhone
Thursday Q&A - Media Edition (Disney, Snapchat, and Vine)

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