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AAPL Stock: 96.13 ( + 0.53 )

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Apple retail strategy may not work for all

updated 03:50 pm EDT, Wed July 26, 2006

Dell, Sony look to Apple?

Large electronics manufacturers such as Dell, Sony, and Philips appear to be attempting to following Apple's lead by establishing their own chains of branded retail stores and kiosks, according to one researcher. Those endeavors could turn sour, however, as OEM storefronts and kiosks represent a major change that will disrupt the current retail ecosystem. "Bypassing their existing distributors and retailers could prove successful for some, but might present challenges for others," said ABI Research director Vamsi Sistla. Most of those vendors already boast significant online sales, but want fresh fields for expansion and the ability to provide a richer, more customized experience for shoppers than retail chains can.

Control and protection of brands make the move to own-brand retail storefronts a tantalizing option for some manufacturers, for should consumer demand fall, an OEM can take more effective countermeasures via its own outlets while maintaining better control of margins.

Risks

Retailers' stock prices are partially determined by their bricks-and-mortar performance. Wall Street sets share prices using variables such as the number of stores added or closed down, as well as how much revenue per-consumer the stores generate.

By opening their own stores, OEMs such as Sony and Dell -- which were previously rated on their ability to design and make innovative CE products -- subject themselves to new kinds of judgment from financial markets. OEM-owned outlets represent permanent cost centers, and must perform well year-in and year-out.

"Stores mean ongoing operational costs as well as infrastructure," Sistla said. "Anybody can make money when times are good, but when economies contract, retailers are the first to be tested. Some will remain profitable, others may not. With this strategy, OEMs may be trying to 'boil the ocean.'"




by MacNN Staff

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Comments

  1. that one guy

    Joined: Dec 1969

    0

    Gateway

    Anyone remember the Gateway stores. I liked them. When people needed a PC, I always steered them to the Gateway stores to avoid the shysters at places like Bestbuy and CompUSA. I went to a Sony store here in socal and I was not impressed. They are the opposite of the Apple stores with very dark lighting and cramming too many items in the small area.

  1. cebritt

    Joined: Dec 1969

    0

    Dell is Gateway model...

    ...not the Apple retail model. It is just a showroom, you can't walk out with a computer. Consequently, Dell stores will suffer the same fate as the Gateway stores.

  1. dsteinman

    Joined: Dec 1969

    0

    it's not just the store..

    going in the Apple store is an experience in and of itself.. most retailers just don't get that..

  1. slider

    Joined: Dec 1969

    0

    Another example

    Do any of these companies actually think? If these companies are basing their decisions based on Apple's success, then it's just another example of how these companies just don't get it. Plus, unlike most of the PC companies (dell is the exception) Apple Stores filled a void since a lot of places just didn't carry Macs or provided really poor service and lacked knowledgeable employees.

  1. JulesLt

    Joined: Dec 1969

    0

    Advertising

    I suspect that Apple know full well that a lot of customers will visit the store then order online. You can see from the layout of the stores is that the main intention is to get iPod customers to walk though the display of Apple machines, see the Genius bar for service, etc, before getting to the iPods.

    And having heard some of them talking, a lot of them STILL don't get that Macs aren't just another brand of 'PC'.

  1. jhorvatic

    Joined: Dec 1969

    0

    Dell stores aren't stores

    The Dell stores aren't stores at all. They will have no inventory. It's just another walk-in order on the web kiosk, not a store. The Apple store does a whole lot more than put inventory on the shelves. They have live training sessions, all the computers are fully functional and online. They have a kids play area with all kinds of games, learning software that the kids can use without limitations. They have more than one computer on display that anyone can use with lots of the extra software and games that you can try out right in the store. And then they have the Genious bar where all your tech questions can be answered and your system if it has a problem can either be fixed on the spot if it is a minor problem or in a few days for more complicated problems. Dell's kiosks won't have any impact because there products are boring and they still depend on Windows as an operating system and most people are starting to see that's not a very good thing at all anymore with all the viruses, spyware, malware, and trojans out there. OSX has none of that period.

  1. vsmith1

    Joined: Dec 1969

    0

    Sony?

    In the Uk there have been a group of Sony Centres (www.sonycentres.co.uk) that are stores that sell Sony equipment - as far as I can tell they are franchises and not directly owned by Sony. They sell Sony equipment - and predominately the AV and TV stuff rather than the computers. So whether this approach would work elsewhere is debatable.

    Just a reminder that the rest of the world is not the as the USA. But don't get me started - I'm getting fed up of iTunes announcements that only apply to the USA (eg TV shows).

    Vince

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