Apple to open retail stores in US,
- 09 May, 2001 11:21
Ending years of speculation that it would open its own retail outlets, Apple confirmed this week that it is preparing its first store launch for May 19 in the US.
In Australia Apple refused to comment on whether Apple would pursue a direct retail model until the official announcement on May 15 but sources say the recent troubles of Buzzle, its major retail partner, has created a climate conducive to local imitation of the retail strategy.
In March this year, Buzzle was forced into administration when Apple Australia called in a $20 million outstanding debt.
"As an ongoing exercise, we continue to review and investigate strategies to ensure the best possible experience for our customers," said Apple's corporate affairs manager Myrna van Pelt.
In the US, an invitation sent out to the media, saw Apple saying it will open a branded retail store in McLean, Virginia. More details were not available and an Apple spokeswoman declined further comment.
The computer maker relies mainly on third-party retailers and its Web store to sell its products. There are about 3,000 retail stores selling Apple products in the US. and about 9,000 stores outside the US, according to Andy Preikschat, an analyst with investment bank WitSoundView Group. About two-thirds of its revenue is derived from sales at those stores -- the largest of which include CompUSA and Circuit City Stores.
"Apple works very closely with these stores," Preikschat said. "I don't think that's going to change."
In the US, the other one-third of Apple sales are made directly to consumers and schools from its Web site.
While Apple has made it a point this year to improve its overall distribution channel, several Apple retailers have hit hard times in the past year, as the demand for PCs slows and Apple's market share in the desktop market feels more pressure. The maker of colorful desktops and laptops is the eighth largest computer maker, according to Gartner Group's Dataquest.
In late April, the owner of The Computer Store, a mid-sized Mac-only reseller, announced that he was looking for a buyer for the Texas-based retail outlet. The store first closed in August 2000, but continued selling used computers and products on the Internet and also kept repairing Macs.
"When Apple started selling on the Internet, we had to start matching Apple's prices," said Gene Holley, the 20-year owner of The Computer Store. "It just got tighter and tighter.
"Selling to schools was also a big part of our business," he said. "As we lost the schools, we lost a lot of that business."
Another Mac-only retailer ComputerWare, based in the San Francisco area, closed its chain of stores in early April after 17 years in business.
Holley, who recently put his retail store up for sale on eBay., said that Apple's continued efforts to improve the margin it makes on computer sales became too difficult to match. "I can make more selling the business and property it is on than I can make selling computers," he said.