Apple expected to expand store-within-store presence at Walmart, Target
Analyst Gene Munster with Piper Jaffray noted that while Apple currently has just 250 retail locations in the U.S., the company has the potential to reach many new customers by expanding its micro-store concept.
Currently, Walmart has over 3,800 locations in the U.S., and Target has 1,700 stores. Munster expects Walmart to be a significant partner for Apple in expanding the company's presence, as Walmart has better rural distribution.
Apple is currently testing its store-within-a-store concept at two Target locations, and 23 more stores will be added before the end of the year. AppleInsider was first to report in January that Apple would begin opening new outlets within Target locations this year.
In addition to Target, there is also one Apple store-within-a-store being tested at one Walmart in Lowell, Ark. That Walmart features a dedicated space that is distinctly separate from the rest of the big-box retailer's other departments.
Munster visited one of Apple's two Target micro-stores, and found it similar to Apple's existing Best Buy locations, which are present in about 40 percent of Best Buy's U.S. stores. However, unlike Best Buy, Target does not sell any of Apple's Mac lineup.
New signage prominently displayed at Walmart's Lowell, Ark. location. | Source: ifoapplestore.com
"We believe the Target/Apple relationship will not expand to the full Mac lineup given Target does not sell a significant line of PCs," Munster wrote in a note to investors on Thursday.
From his visit to Target's micro-store, Munster found that product inventory was unsurprisingly far less than Apple would carry at its own retail stores. However, he did find that Target carried most of the company's product lineup, with the exception of Mac hardware and software.
"The Apple micro-store was staffed by a Target employee who claimed to have received two hours of training from Apple," he said. "Overall, the layout of the Target micro-store was more inviting compared to other Best Buy Apple micro-stores we have visited, in our opinion."
Apple Chief Executive Tim Cook was asked about his company's store-within-a-store initiative and its relationship with Walmart during Apple's quarterly earnings conference call last week. Cook didn't offer much in the way of details, but explained that Apple is "trying some things." He said he didn't expect Apple to be present in 10,000 Walmarts.
22 Comments
Apple is now officially a discount store brand.
I'm surprised. Is this the work of the new retail chief?
Oh great. Yet another place to buy an iOS device. Really does Apple actually make anything else, or is this it.
Oh great. Yet another place to buy an iOS device. Really does Apple actually make anything else, or is this it.
Yeah - Apple does make other stuff.
But iOS is what sells.
It's not an issue of being a discount store brand. Apple is a mass brand and as such needs to keep expanding its presence. I used to work for a small manufacturer/retail chain that had a huge opportunity at Target doing a shop in shop (for the stationery aisle). The then owners of the company, who were not Target shoppers (or any mass retailers for that matter) thought the exact same thing - that going into Target would damage their brand. They just couldn't get their arms around the idea that Target would have made significantly more people aware of their brand and sales at Target alone would have more than doubled what the company was doing with their own stores.
Yes, Apple has become an iconic brand, but they don't have stores in every city and there are large areas of the US where consumers are still more likely to be buying the traditional HP or Dell PC because it's what they see at Walmart, Office Depot, etc.
Distribution is the name of the game and getting more eyes on Apple's products will drive sales. Yes, it kind of goes against what those of us who have supported Apple for decades feel about the brand, but it's inevitable for a great product or brand to expand its reach because eventually more people come to realize just how great a product it is.
This type of expansion of brands has happened time and again. Think about Honda as a perfect example. In their infancy, they attracted a very small group of consumers because they only produced cars that appealed to a certain group of people. They slowly expanded, had great reliability, design and value and guess what, they grew. Those loyal Honda fans (I used to be one having owned a CRX hf, CRX Si, two Accord Ex's and two Odyssey's) who bemoan the loss of the lightweight CRX or sporty Prelude understand how this type of growth plays out. I'm hoping that Apple doesn't follow the exact same path as Honda given they've lost their ability to produce decent looking cars, exciting engines and technology and seem to simply be going after volume regardless of whether they produce and offer the best solution.
Apple is now officially a discount store brand.
I'm surprised. Is this the work of the new retail chief?
It's a post-discount store world, much like it's a post PC world.
Seriously, you can't discount (intended) the power of these retailers.