Google Reportedly Shelves Plan for Flagship Retail Store in New York

By Jaikumar Vijayan  |  Posted 2015-11-03 Print this article Print

The decision comes after the company had already spent $6 million sprucing up a location in Manhattan's SoHo district.

Google has apparently ditched plans to launch a retail store in New York after reportedly spending some $6 million getting a facility ready for that purpose.

The space located in Manhattan's trendy SoHo district was to have been Google's first ever brick-and-mortar store and would have served as a flagship outlet for the company's Chromebooks, Nexus phones and future consumer products.

Google leased the 5,442-square-foot space located on SoHo's Greene Street last year, Crain's New York Business reported Monday. Since then, it has spent a significant amount of time and money renovating and restoring the landmark building with features like sunken floors, soaring ceilings, large glass windows and other additions, Crain's said.

However, instead of moving in, Google now appears to be trying to sublease the facility to others in a development that Crain's said would appear to indicate the company has abandoned plans to open a store there.

Google did not respond immediately to a request for comment.

Rumors about Google opening a line of retail stores have been swirling since February following a report in 9to5 Google about the company getting ready for stores similar to those operated by Apple and Microsoft.

Apple currently operates 265 retail stores in the United States with an average of 100 employees at each location, according to the company. A total of 30,000 employees work for Apple's retail chain around the country. Microsoft, meanwhile, operates more than 100 retail stores spread across 33 states. It also has stores in Canada, Australia and Puerto Rico.

According to 9to5 Google, an "extremely reliable" source at Google had confirmed the company's plans to open similar retail stores as well as several flagship stores in major cities in a bid to get its products into the hands of more consumers.

Google already maintains an in-store presence at numerous Best Buy locations around the country where Google-trained staff help consumers get hands-on experience with Chromebooks and Nexus Android phones. Best Buy, however, handles all sales and monetary transactions generated by the in-store locations.

The planned new Google Stores would have a much broader charter, including meeting financial targets from direct sales to consumers, 9to5 Google had reported.

Ezra Gottheil, principal analyst at Technology Business Research, said Google's reported decision to pull the plug on its flagship store in Manhattan suggests the company plans to spend its marketing dollars elsewhere.

A rival like Apple, which is mostly reliant on device sales for its revenues, has a different goal in setting up a brick-and-mortar retail chain than companies like Google and Microsoft, which have smaller device businesses, Gottheil said.

"Apple's retail chain serves a different purpose. It drives sales of its core business, devices," he said. "Apple actually transfers dollars from its corporate marketing budget to its retail operation for the big stores at well-known and expensive locations, like the Louvre," Gottheil said.

In contrast, for Google and Microsoft the impact of having such stores is more indirect. "Does Google need flagship stores? No. It's a tradeoff among marketing expenditure choices, and Google decided to put its marketing dollars elsewhere," he said, referring to the apparent abandoning of Google's SoHo store plans. "These flagship stores don't pay for themselves. Not even Apple's, though the overall chain is very profitable, and the flagships do a great deal more business than Google would."


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