When Apple slammed the brakes on its plans to roll out a network of franchised retail stores aimed squarely at the home market, some industry watchers said the concept would quietly disappear. Its frosty reception from current Apple dealers had proved more troublesome than Apple anticipated, went the theory.
However, Australian Reseller News has learned that Apple's plan is still very much alive and well, although it may be changing in scope. Specifically, retailing giant Harvey Norman has approached Apple about placing its proposed new retail centres within existing Harvey Norman locations.
When Apple announced its plans to initiate its retail plan with the launch of an Apple-owned store in Sydney - at the time rumoured (by sources external to Apple) to open in Chatswood in September - the reception was far from positive. Many Apple dealers - not the least of which was Harvey Norman - saw the company's plan as something of a threat. The market's tough enough without added competition from the supplier itself, was the standard line.
"We're unconvinced of the merits of the plan," said Michael Smart, national marketing manager of Choice Systems, a major Apple dealer. "Apple's greatest strength has always been the loyalty it has received from its channel and I think it will be interesting to see how this [plan] affects that loyalty."
At the time of Apple's announcement, Harvey Norman group controller Tony Gattari had similar reservations. "I get very concerned any time a supplier begins selling in direct competition to us. We see that as a very serious situation," he told ARN. "Our policy is that we don't compete with our suppliers." Gattari said Harvey Norman did not object to Apple franchising stores, the problem lies in any of the stores being Apple-owned and -operated.
However, rather than simply take a negative stance to Apple's plans, Gattari says Harvey Norman has now offered an alternative that would allow Apple to gain the increased market share it seeks among home users, while preserving the manufacturer's relationship with dealers.
"We recognised the value in Apple's plan and I think both parties want to preserve the partnership that we have. As a way of achieving that, we have proposed that Apple locate its centres within Harvey Norman stores." How many stores? "I'd say, perhaps, two or three in Sydney, two or three in Melbourne . . . two in Brisbane, and two or three in New Zealand. Obviously, a number of things would need to be worked out, but the invitation is on the table," Gattari said.
Gattari says Harvey Norman has long seen the need for such centres. "To sell Apple successfully you need to specialise. We see that in our stores; those stores that have Apple specialists are infinitely more successful selling Apple than those that do not," Gattari said. "Apple's not an easy sell: Apple - and anybody selling Apple - is up against a Windows/Intel juggernaut. It's much easier to sell a Windows box, because that's what a lot of people see their neighbours with, or what they see at work. And, generally, sales people will sell whatever it is easiest to sell.
"We've extended the offer to Apple," Gattari said. "They haven't come back to us in an official capacity. Right now that's all I can tell you." Although Apple sources acknowledge the company is in discussion with Harvey Norman, they declined to comment.