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Is Apple Setting Its Retail Sights on Target?

Is Apple Setting Its Retail Sights on Target?

Certain Target stores may soon host miniature Apple stores in their electronics departments, if a recent report is accurate. The store-within-a-store concept is something Apple's already doing with Best Buy, but putting Apple kiosks inside Target stores could expand the company's brick-and-mortar retail reach even further. It also may be a sign that Apple's faith in Best Buy has dimmed.

By Rachelle Dragani MacNewsWorld ECT News Network
01/09/12 11:06 AM PT

A couple dozen Target retail locations could soon be home to mini Apple store displays, according to a report from AppleInsider. The move to put special kiosks in 25 Target stores could allow Apple's retail ops to expand into markets that aren't large enough to support standalone Apple stores.

Apple has been selling iPods in Target stores since 2002, and it has since added products like iPhone accessories and iPads. However, the new deal could bring MacBooks and other larger Apple products to the stores as well. The company will begin its initiative inside 25 Target stores later this year, according to the report.

Apple operates 245 U.S. retail stores on its own, but branching into some of Target's 1,752 U.S. stores could be a way to reach customers that don't normally have brick-and-mortar retail access to the company's products.

Apple did not respond to a request for comment for this article. When contacted, Target declined to confirm or deny the report.

Win-Win Situation

Apple has experience with retail partnerships. More than 600 Best Buy locations have Apple mini-stores featuring the company's computers and accessories. Apple also sold products at Sears, Circuit City, Computer City and Office Max in the past. Target has also been carrying iPods and other Apple products for nearly 10 years.

"Target and Apple have a very good relationship. Apple fits right into Target's wheelhouse, as they focus on the young, hip consumer. Target values design on a budget, and while I wouldn't say that Apple markets to the budget-conscious consumer, obviously design is king, so there is great synergy between the two companies," Jerry W. Sheldon, retail analyst at IHL Consulting Group, told MacNewsWorld.

That synergy could lead to a valuable partnership for both companies. As online retailers such as Amazon and more discount spots like Wal-Mart expand their in-store and online offerings, Target could use an edge to stay current in the retail scene.

"For Target, it allows them to upgrade their store image considerably and creates another reason to drive store traffic, as it further emphasizes the hip and stylistic audience that Target craves," said Sheldon.

It also has the potential to be a winning strategy for Apple as it seeks to branch out to a mass market where Android-based phones and other products are gaining in popularity. Apple might also be looking ahead in the volatile retail market to diversify its outlets.

"While Best Buy may have been the belle of the ball four or five years ago, that luster is fully tarnished. Many of us think they are dead men walking," said Sheldon.

PR missteps and inventory miscalculations, especially over the past holiday season with missed fulfillments on many Black Friday orders, have left Best Buy struggling to give consumers a reason to buy from its stores rather than from reliable, and often cheaper, online competitors, he said.

"I think that Apple sees the writing on the wall with Best Buy and is using this as an opportunity to align themselves with someone that is going to be around for the long haul," said Sheldon.

Apple Establishing Control

If Apple does expand into Target stores, a key goal will be adding on to its loyal customer base and attracting new consumers to buy into the company's ecosystem. To make sure that its presence could be felt within another retail outlet, Apple often stocked Best Buy stores with Apple sales consultants to assist in the purchasing process.

"I hope Apple plans on staffing Apple sales consultants in these locations, because they do nothing to win new customers to the brand or garner any real brand loyalty when the customer doesn't have the experience of the warm welcome or expert guidance on all questions Apple," Leslie Hand, research director at IDC Retail Insights, told MacNewsWorld.

For a company with such an emphasis on image, loyalty and product experience, well-trained personnel will be necessary for both Target and Apple to win with this potential deal, especially when dealing with complex and relatively pricey products like computers, said Hand.

"In the Best Buy example, far too many Apple stores were not staffed, even amidst a prominent display of the full range of devices. For the serious buyer, perhaps not as well-informed about the business arrangement between Apple and Target, this comes off as oddly elitist, reinforcing an expectation that Apple computers are not for everyone," said Hand.

Since the plan will reportedly start small with just a couple dozen locations, then slowly grow the partnership, both companies have the chance to benefit from the deal.

"I think all in all, Target gets more out of this deal than Apple -- that is, of course, assuming they don't mess it up. They potentially take business from Best Buy and traffic from Wal-Mart, while further upping their image. Target isn't prone to drop the ball, so if I had to guess, both sides will get it right," said Sheldon.


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