Apple jumps into retail amid controversy

Apple Computer Australia's plans to roll out a network of franchised retail stores is meeting mixed reactions from Apple dealers and channel partners. At the forefront of Apple's strategy is the planned launch of an Apple-owned, Apple-staffed retail operation in Chatswood, Sydney, in September.

Apple sales director Steve Rust told Australian Reseller News Apple's plans centre around getting the Chatswood store up and running as a successful operation offering home-market customers "a friendly, solutions-oriented shopping experience". Once that is achieved, Apple's plan is to implement a network of franchises throughout Australia running on a similar model. Rust says current Apple dealers and other qualified parties will be invited to buy into the franchise concept at about $1,000 per square metre - with typical charges for kitting out an existing location totalling $120,000Ð$150,000.

Wait and see

Rust declined to say how many retail locations Apple expects to franchise. "The speed of the roll out will depend on the success of the initial location," he said. "If it is successful, and we think it will be, the franchises will grow from there."

The retail/franchise plan is apparently born out of Apple's belief that it is not getting a big enough bite out of the retail market, and Rust says he doesn't think Apple's current network of dealers will object to the company's plans. "A lot of resellers have been very positive about the opportunity, and are simply waiting to see proof of what the stores are going to be like."

Be that as it may, a number of Apple dealers ARN spoke to are seeing things differently. Michael Smart, national marketing manager of Melbourne-based Choice Systems, which he says is "currently Apple's biggest dealer", says "We've spent a lot of time and money developing our Apple business and we're unconvinced of the merits of the plan. 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 affects that loyalty."

Another major Apple dealer, who requested anonymity, has stronger words. "Apple had its best channel in the world in Australia and I've seen them throw it away," he said. "They haven't looked after their resellers; they haven't honoured their loyalty and now everyone's looking to get out of Apple and switch to clone technologies and/or PCs."

Another source of frustration for many Apple dealers is an August 2 letter sent by Rust to all Apple dealers warning that resellers who sell Mac clones will lose rebate funds. When ARN spoke to Rust on August 12 he denied Apple had taken any steps to stamp out clone sales, saying only: "We have programs in place to reward Apple sales with financial incentives."

"The letter was another bad move," said the Apple dealer. "It's difficult enough to survive in a market of declining margins. Making things difficult for dealers isn't going to help Apple."