April 29, 2011, 11:58 AM

Eyeing an Opportunity

Retailers invite shoppers to shake, touch and tilt, using the iPad's unique features to inspire and sell.

Lead Photo

The iPad is a little tough to categorize. It's not quite a smartphone and it's not quite a laptop. It's mobile, but it won't fit in a pants pocket. Its screen is larger than a phone's, but smaller than a computer's. It's about the size of a netbook, but has amazingly robust technology that netbooks do not.

What's easy to see, however, is that it's a huge hit, and that it enables online retailers to present their products in ways they can't on PCs or mobile phones.

Consider an iPad app created by apparel retailer Polo Ralph Lauren that presents an image of a woman in a green dress standing in a pirouette pose. When a consumer blows into the iPad's microphone, as prompted by the app, the woman spins in slow motion to show off the dress from every angle, all accompanied by operatic music.

"We are always looking for new ways to break the mold of the average shopping experience and push technology as a medium," says David Lauren, executive vice president of advertising, marketing and corporate communications. "This application places the user in the driver's seat so they can control the technical functions of the apparel and experience the brand in a way that is visually entertaining."

Other retailers, from toy retailer Toys 'R' Us Inc. to fashion apparel merchant The Neiman Marcus Group Inc., have created iPad apps, including some that bring formerly printed catalogs to life in new ways. And, experts point out, the large number of mostly affluent consumers accessing conventional web sites on iPads means retailers will have to rethink some aspects of how they design their e-commerce sites.

An attractive demographic

These are pressing concerns for e-retailers because of the large number of consumers who are flocking to the iPad, a development that suggests good prospects for the competing tablet computers coming to market in 2011.

Many skeptics predicted the price would limit iPad sales to the most devoted Apple fans, but Apple proved them wrong, selling 15 million iPads between the April 2010 launch of the device and December 2010. The word of mouth—and word of web—on the device made the iPad 2 even hotter. Apple sold an estimated 500,000 of the iPad 2 within three days of its launch, according to research and investment firm Piper Jaffray & Co. The day the iPad 2 was released, the firm called numerous chain stores where it was being sold—including Apple, Best Buy Co. Inc. and Target Corp.—and found every store was already out of stock.

Most of those who snapped up the iPad 2 were first-time buyers, although some were already upgrading to the lighter, more powerful second-generation device. Based on interviews with 236 consumers waiting in line at stores in New York and Minneapolis on the day of the iPad 2 launch, Piper Jaffray concluded 70% of those purchasing the iPad 2 were first-time buyers, while 30% were upgrading from the iPad 1.

"Clearly the iPad platform is expanding, and to be relevant in the tablet market any web site needs to work well on the iPad—or even better, have an app," says Gene Munster, senior research analyst at Piper Jaffray.

What's more, the consumers buying the pricey iPad—the iPad 2, like its predecessor, is priced at $499 and up—are relatively affluent and well educated, making them the kind of shoppers retailers covet. For example, 25% of iPad users have incomes over $100,000 and 51% have at least a college degree, according to a survey late last year by The Nielsen Co. By comparison, the U.S. Census Bureau says about 20% of U.S. households have annual incomes of $100,000 or more and about 28% of the U.S. population has a college degree.

Big spenders

The iPad can render retailer apps designed for the iPhone, but only displays them at the size of an iPhone screen. That means the app won't take advantage of the much larger screen of the iPad. The iPhone screen is only 3.5 inches long on the diagonal versus 9.7 inches for the iPad.

Many of the first retailers to develop apps specifically for the iPad were high-end brands that cater to more affluent consumers, and that saw the potential of creating richer apps that would appeal to buyers of Apple's tablet computer.

Polo Ralph Lauren's iPad app for its RLX athletic apparel brand features athletes in flight, demonstrating the form, style and functionality of the apparel. The tablet technology enables shoppers to interact with the athletes' images on screen by tilting, rotating, flipping and tapping the iPad to manipulate their movements, taking advantage of what Apple calls its "accelerometer" that detects how an iPad is being held. For example, a shopper can tilt the iPad app back to make a stream of models move towards her, and forward to make them move away. Tilt the iPad to the right or left and they change outfits.

Gap Inc.'s 1969 Stream app, named after its denim line, covers the iPad with what seems like wallpaper made up of images of various shapes and sizes. Some of the photos can be tapped to play a video or to access more content such as an article, and consumers can swipe in any direction—up, down or diagonal—to see more images.

Flash-sale retailer Gilt Groupe Inc., which launched an iPad app in April 2010, soon after the device was introduced, recently reported that 4% of its total sales now come from iPad users. The average order value for a purchase made from an iPad is about 30% higher than for purchases made from an iPhone. In fact, the most expensive item sold so far on Gilt.com, a $24,000 vintage watch, was purchased on an iPad, Gilt said in March.

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