Apples Challenge: Retail Balancing Act

Last month, Apple followed Gateway's country store example by opening its first two retail stores.

Last month, Apple followed Gateways country store example by opening its first two retail stores, one in Tysons Corner, Va., and another in Glendale, Calif., to be followed by 23 stores later this year. Does this make sense for Apple, or will this move alienate the companys retail channel beyond repair?

By all accounts, Apple has hit a home run with its first two stores, at least in their opening weekend. According to Apple, the stores saw 7,700 visitors and pulled in about $599,000, and that aint chicken feed.

Although Apple has only about a 5 percent market share in personal computers, Mac users are passionate about their Macs. Apple really hasnt been well-served by the retail channel in the past, CompUSA and others notwithstanding.

Potential Mac buyers have to sort through all the PC hardware before they can winnow out a retail stores few Macs, and then, more likely than not, the stores salespeople dont have a clue as to how to sell a Mac. And although theres enough Mac software to satisfy most users, you wouldnt know it to look at the selection in a typical computer store.

Having its own stores will put Apple more in control of its retail presence. After all, all the products are Macs, and an Apple store can ensure that theres a large selection of software and Mac peripherals available that will work with Mac computers. Thats sure to warm the hearts of Apples software and hardware developers.

Through its stores, Apple can extend its hardware-selling strategy to include the high-margin products of services, software and training in areas that are underserved by VARs. For too long and with few exceptions, Mac users have had to rely on mail-in service or lackadaisical and inefficient retail channel repairs. Apple stores will provide a quick turnaround on repairs for Macs in and out of warranty—especially those little niggling repairs such as replacing port doors or rubber feet that fall off.

What Apple cannot do is alienate its best retail channel vendors by opening up shop right in their back yards and siphoning away their business. For its retail stores to truly work, Apple needs to find the right balance between its own stores and its retail channel. Apple needs to pay close attention to, and learn from, Gateways recent stumbles and not build retail stores too fast. A limited number of stores in areas of the country that are underserved, especially large metropolitan areas, seems to make the most sense.