Will Apple Take Root in Walmart?
Apple's branded retail stores have been very good to the company. They're destinations not just for buying products, but also sampling the company's newest devices and getting support and service. But as Apple extends its retail reach, it's putting more products on the shelves of third-party retailers. Can a store like Walmart generate the same brand loyalty as Apple's famous iStores?
May 9, 2012 5:00 AM PT
Forbes released its annual list of the largest corporations in the U.S. this week, and Apple had the biggest increase. It jumped from the 35th spot in 2011 to finish 17th on this year's list, which ranks companies on the basis of revenue.
Apple still hasn't climbed into the ranks of Exxon Mobil, Walmart or General Electric when it comes to cash flow, but in the tech world, only HP was ahead of Apple on the list.
Apple's recent sales records and steady climb higher on the list of America's biggest money-makers is thanks in part to its branded retail stores, which emphasize a unique customer experience. But it seems that Apple may intend to extend its reach further by partnering with retailers that have much larger footprints.
Spreading the Retail Love
In Apple stores, shoppers are encouraged to touch and sample products, and traditional cash registers and lines don't exist. Retail experience and customer service are paramount. That experience is part of Apple's broader strategy of increasing brand loyalty, Leslie Hand, research director at IDC Retail Insights, told MacNewsWorld.
"Apple has incredible sales per square foot in its stores because of the combination of products and service," she said.
But while Apple is increasing its retail presence, many less populated areas still don't have an Apple store. So the company is branching out to other retailers to drive more mainstream sales. Walmart and Target are two of the major retailers offering expanded lines of Apple products in addition to their regular electronic lineup. Both stores are hoping that with more iPods, iPhones and iPads, overall traffic and sales will increase as well, according to a report this week from The Wall Street Journal.
Increased sales could be a winning situation for Apple too, but an iPad sale in a Walmart might not generate the same brand loyalty that it would in an Apple store, said Hand. She questioned whether or not a mini Apple store within a Walmart could offer the same automated checkout line, EasyPay options, device setup and support that is almost guaranteed at a true Apple retail store.
"I have concerns about a strategy that expects products alone to draw traffic. The jury is still out for me, because I have not yet seen an implementation of an Apple store within a store that delivered Apple retail service," she said.
Meanwhile, in Lawsuit Land ...
Elsewhere, the stakes are climbing ever higher in the company's ongoing patent war with Samsung.
Apple may have gained significant ground in the battle between the two companies this week after a judge ruled that Samsung will not be able to use certain source code in its defense against Apple. In December of 2011, the U.S. District Court for the Northern District of California asked Samsung to provide the source code for the allegedly infringed-upon patents. Samsung supplied the court with some code, but not enough.
Apple alleged that Samsung was also working to create 'design-around' code changes that would alter the code enough to avoid an infringement claim -- specifically, a "blue glow" code, according to Apple, that changed Samsung's display so it didn't infringe upon Apple's "over-scrolling rubber band effect" patent. In response to Apple's complaint, a judge ruled Monday that Samsung could only use code dating before December 31, 2011 -- before the design-around'was released -- in its court case.
Big Blow for Samsung?
It could be a big gain for Apple in the pending case, but only Samsung is to blame here, Raymond Van Dyke, a Washington, D.C.-based technology attorney and consultant, told MacNewsWorld.
"Failure to adhere to the rules in litigation makes you vulnerable to sanctions," he said. "For whatever reason, the source code in question was not produced, despite the alleged 'proof' of legitimate design-around efforts within the code. Samsung apparently made some efforts to comply, producing some portions of the code, but the judge viewed this partial compliance as insufficient and violative of the court's production order."
That's not to say one blow can determine the case, Van Dyke said, especially not in a case like this one, wherein each side is fighting with seasoned legal counsel in a high-stakes battle.
"Trial strategy is often a delicate and complicated endeavor, particularly where multiple trials and competing strategies are interplaying internationally," he said. "The smartphone battles are global, and this minor skirmish in one of those battles touches on the subtleties and importance of the goal -- worldwide domination in the smartphone area. Perhaps a combatant will take the hit here for an advantage elsewhere."
In addition to putting more rules down on the proceedings, the lawsuit might be getting smaller, too, according to FOSS Patents. Apple agreed late Monday to drop about half of its infringement claims against Samsung, the law blog reported. Five hours later, Samsung said it would drop five of its 12 patents to narrow the case.
As part of the ongoing negotiation, the CEOs and lead counsel for both companies will meet on May 21 and 22 to discuss the suit. A summer trial is scheduled to follow if no settlement is reached. In the filing Monday, Apple and Samsung reportedly agreed that given the size of the case, a summer trial would be too soon, but they bickered over who was being uncooperative in the lead-up to the trial. The willingness to scale down the suits is an indication the companies want to stay on schedule, though, according to FOSS Patents.
Apple didn't respond to our requests for comment.