“Not impressed with what I saw.” “Could be Apple’s first flop in years.” Sentiments such as these seemed to hit the airwaves as soon as last week’s Apple Watch presentation in San Francisco concluded. Another oft-heard comment, “Who’s going to spend that kind of money for a tech device they have to upgrade every 12 to 18 months?”

Here’s the hitch: The Apple Watch is not a tech device. It’s a fashion accessory with technology. While on the surface that may sound like semantics, there’s a real difference: It’s about positioning in the marketplace and tapping into existing consumer behavior. Evidence of this perspective is Apple’s own promotional strategy: A 12-page insert in Vogue and gushing pre-launch editorial coverage in several global fashion mags. Even the Apple dog-and-pony show featured model Christy Turlington-Burns bridging the tech features with style. As much emphasis was made on the craftsmanship, design and material choices of the Apple Watch as was made on the technology features. And when looking at pricing, one sees the same good-better-best strategy based on materials that are used with heritage watches and jewelry (e.g. watches in stainless, gold, platinum). Add on variation through multiple watch bands styles and repeat purchases and mini-upgrade cycles are created. With the mid-tier Apple Watch in stainless steel (and not just any stainless, a specially formulated one), prices can nearly double depending on the bracelet selected, indicating the importance of the watch band as part of the product statement.

When we look at customer behavior of the better (~$300 price point) designer watch category, shoppers inspired by a hot trend will buy a new timepiece every 6 to 12 months. At an entry of $350 for the Apple Watch Sport, it is not unreasonable to see customers take the leap towards the Apple Watch as a fashion, style and status symbol. With such engrained customer behavior, upgrading to new technology—and more importantly, new case designs or materials, should not pose a threat to adoption and repeat purchase. We’re also looking at the designer iPhone case market for lessons on customer behavior and purchase cycles, and expect to see a number of third-party bands creating newness and enhanced personalization throughout the product lifetime.

In our recent store checks, we’ve noted what appears to be a slowdown in certain designer watch categories, which may be in part due to consumers holding their breath for the Apple Watch availability, as it is due to a lack of excitement from the entrenched designer lines. To learn more about how the Apple Watch may disrupt the designer watch category—especially as we head into Mother’s Day, Father’s Day and Graduations—and to understand which retailers are likely to benefit from the launch—contact us and learn how our custom reports help clarify theses and other questions.

The information contained within this post is the opinion of Mary Epner Retail Analysis and does not provide any advice regarding the purchase, sale or any other transaction in any security. For our complete terms, please click here


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