updated 10:35 am EDT, Thu April 5, 2007
Best Buy Apple boutiques
Apple's new, expanded distribution deal with Best Buy may increase the effective number of distribution points for Macs by 10 percent and bring new boutique layouts to showcase Apple products. Analyst Gene Munster of Piper Jaffray said that while the growing presence of Macs and other Apple products at Best Buy will not affect the firm's outlook for Mac sales in the June or September quarters, the strengthening relationship will bring higher visibility, including boutique-like Apple stores in some locations. Best Buy, which sold Apple TV one week ahead of other retailers, announced it would increase the number of retail locations stocking Macs from 57 today to about 200 by this fall.
"We believe Apple's store within a store at Best Buy will be much different compared to the current pilot store rollout, which was a table with Apple products on it," Munster told clients in his research report.
"The difference is we expect some (smaller number) of these 200 stores will have walled-off Apple stores, while others will have improved layouts. What is clear, you won't wander around Best Buy to shop for Apple. A good way to think about Apple & Best Buy is the Coach or Chanel store within a store concept at Nordstrom," the analyst continued.
According to Munster, the expanded retail presence at Best Buy accounts for only a 2 percent increase Mac distribution; however, the firm estimates that volume of visitors through Best Buy equates to about a 10 percent increase in Mac distribution points. As of December of 2006, there were a total of 7,500 worldwide Mac distribution points.
The analyst noted that the new agreement with Best Buy will offset the impact of the recent announcement of CompUSA store closings, but overall will result in an increase of less than one percent in Mac distribution points. Earlier this year, the struggling retailer announced the closing of 50 percent of its retail stores, or about 126 locations.
"Due to CompUSA's closings, the addition of 200 Best Buy stores to the Mac channel means that Mac distribution points continue to increase," Munster wrote. "But this news indicates that the pilot is succeeding, and further expansion should have a material impact."
The relationship is headed in the right direction and could result in a full expansion to Best Buy's 822 retail stores, the analyst concluded.