20-20 Hindsight
- Business, Apple Store, Looking Back -
Some guys unearthed an interesting six-year-old article from BusinessWeek Online by Cliff Edwards, entitled “Commentary: Sorry, Steve: Here’s Why Apple Stores Won’t Work”, which goes to show that Michael Dell apparently is not alone.
In the article, Edwards says that Steve Jobs is putting his foot in it by setting up Apple Stores. The article says
…Jobs thinks he can do a better job than experienced retailers at moving the beluga. Problem is, the numbers don’t add up. Given the decision to set up shop in high-rent districts in Manhattan, Boston, Chicago, and Jobs’s hometown of Palo Alto, Calif., the leases for Apple’s stores could cost $1.2 million a year each, says David A. Goldstein, president of researcher Channel Marketing Corp. Since PC retailing gross margins are normally 10% or less, Apple would have to sell $12 million a year per store to pay for the space. Gateway does about $8 million annually at each of its Country Stores. Then there’s the cost of construction, hiring experienced staff. “I give them two years before they’re turning out the lights on a very painful and expensive mistake,” says Goldstein.”
Edwards adds,
What’s more, Apple’s retail thrust could be one step forward, two steps back in terms of getting Macs in front of customers. Since most Mac fans already know where to buy, much of the sales from Apple’s stores could come out of the hides of existing Mac dealers. That would bring its already damaged relations with partners to new lows.
The article ends
Indeed, rather than taking on the retailers who ought to be its partners, Apple would do better improving how it works with them. A good step would be to end the “think secret” approach that shrouds every new-product announcement. Covert operations worked beautifully when Jobs first arrived on the scene; his charismatic stage presence and Apple’s eye-popping designs created priceless buzz. Now, retailers complain that the secrecy prevents them from doing advance advertising to hype sales and clear out inventory. “They are the most secretive company I’ve ever done business with,” says one top retailer. “They should let the news leak out, to convince the world how exciting their stuff is. That’s how everyone else does it.” Maybe it’s time Steve Jobs stopped thinking quite so differently.”
Edwards tries hard to pull a Michael Dell, but not quite. Dell still holds the record firm, but Edwards’ piece is still an interesting read. For the the full, smug article, click here.
