Apple runs the highest-performing stores in all of retail, but it still needs Best Buy.
The latest proof is Sunday’s announcement that Best Buy will be the first mass-market retailer, aside from Apple itself, to sell the much-heralded Apple Watch. The smartwatch will be carried in 100 Best Buy stores and on the retailer’s website starting Aug. 7, to be followed by 200 more stores in time for the holidays.
The watch first went up for sale through Apple’s website in April. Its launch in Apple’s 450 brick-and-mortar stores was delayed until the middle of last month because of production problems and high demand. It also has been available at a few high-end boutique stores in Paris, London and Tokyo.
“It really is a validation of the strength and power that Best Buy has in electronics,” said Stephen Baker, an analyst with the NPD Group. “If you’re going to launch new products in this industry, especially ones you want to make a splash with, Best Buy is where you want to go with it.”
One of Best Buy’s advantages is that 750 of its 1,400 stores have mini-Apple stores inside that are dedicated to iPads, MacBooks and other Apple products. That’s where the Apple Watch will be sold.
In recent years, Best Buy rolled out other store-within-a-store concepts to highlight other major vendors such as Samsung and Sony. It now has three mini-Samsung shop concepts in TVs, mobile and appliances. Still, Apple continues to be one of its most important partners.
Best Buy officials would not say how Apple ranks in terms of sales among its other vendors. But in the retailer’s annual report, the company says that five suppliers — Apple, Samsung, Hewlett-Packard, Sony and LG — provided 47 percent of all of the merchandise it purchased past year.
Best Buy usually gets most Apple products at the time of the initial launch. One of the notable exceptions was the first iPhone, which was released in June 2007 and wasn’t available at other retailers for more than a year afterward. Best Buy began selling the iPhone in September 2008.
“The Apple Watch is a big addition to our stores and website, and we know our customers want it,” Jason Bonfig, senior category officer at Best Buy, said in a statement.
Best Buy said it will carry 16 Apple Watch models and nearly 50 accessories. It will not carry the Watch Edition, which sells for $10,000 and up.
The watch could bring a much-needed burst of newness to Best Buy amid a lackluster cycle in consumer electronics that has pushed down its stock more than 20 percent since March. But the news of the upcoming rollout of the Apple Watch didn’t immediately inspire investors, in part because only about one-fifth of Best Buy stores will initially carry it. Best Buy’s stock fell 1.2 percent Monday amid a broader market decline.
Best Buy is also planning to roll out Apple Pay to its stores later this year.
Last week, Apple executives said the sale of its smartwatch has exceeded expectations but would not release specific sales numbers. The watch is now sold in more than 19 countries.
The fact that Apple is beginning to disseminate the watch through more outlets shows that it’s ironed out some of its production issues, said Gene Munster, an analyst with Piper Jaffray & Co. But it also could be a result of the “lukewarm” reception to the watch thus far, he added.
“The people who have them tend to like them, but they’re not demanding that their friends buy one,” Munster said. “Part of the strategy of broadening out the distribution is to get it out in front of more people given how it’s going. … The more people who see it, the better chance they have to sell them.”
After Best Buy, Munster said Target, Wal-Mart and Costco are likely to be the kinds of retailers to get the watch. On Monday, Minneapolis-based Target declined to comment on if and when it will carry it.
This will be a big year for the Apple Watch, but it will likely pick up more steam as more apps are developed for it and as people see more value in it, Munster added. “The real breakout year for it is going to be 2016,” he said.
Staff writer Casey Common contributed to this report.