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Riding Apple's Retail Coattails

By Keith Regan MacNewsWorld ECT News Network
Oct 1, 2007 4:00 AM PT

Like the other 180 or so stores Apple has opened since 2001, the newly opened Apple store in the Natick Collection just outside Boston is a brightly lit, minimalist space meant to highlight the company's cutting-edge products. Employees swirl around the store to answer questions and keep a close eye on the iPhones being pawed near the front window.

Riding Apple's Retail Coattails

The luxe environment of the Apple store has become a key weapon in Apple's consumer strategy.

Meanwhile, just a few miles west, Mac reseller Macs at Work reflects an entirely different philosophy. Though it maintains a presence along the highway, the storefront itself was closed late in 2005. There's no inventory in the back room, either -- the owners order what they need when their customers need it.

A Low-Key Approach

Many Apple resellers have long taken a low-key approach to displaying their wares, choosing to emphasize Apple technology and to offer their business customers assurance that they are keeping costs low and passing those savings along to the end users.

That may be changing, however, as the success of the Apple strategy for consumers may show the way to greater fortune for resellers as well. Not everything from the Apple store will translate, but even a little attention to creating the right environment for shoppers can go a long way.

"The Apple stores fit perfectly with the consumer's idea of the Apple brand," Needham & Co. analyst Charles Wolf told MacNewsWorld. "When people walk through the door, they have their best ideas about Apple -- that it's different, that more thought goes into their products -- reinforced immediately."

Apple-Like Storefronts

Several Apple resellers have started to roll out Apple-like storefronts of their own. In Orem, Utah, Simply Mac now sells its wares from a glass-front store that features the same amenities found in the Apple stores -- from high-end displays to the service bar with qualified support staff. In fact, at first glance, it's difficult to tell the store from a flagship Apple location.

The emerging trend comes as Apple's retail success creates some new tensions with its resellers. Many were the favored outlet for Mac enthusiasts in the consumer set, as well as among businesses, before Apple stores began popping up -- for service, if not for buying.

Even resellers wary of the new glitzy approach to selling hardware recognize it is helping their cause.

"The major positive impact is the general buzz that Apple creates in the marketplace," Larry Ondovic, the owner and president of Macs at Work, told MacNewsWorld. "The bulk of the buzz is coming from the stores, iPods, iPhones and iTunes."

The results of that buzz are hard to measure, but Ondovic said after a recent talk to a business networking group, three of the 25 people in the audience scheduled follow-up meeting to discuss switching from PCs to Macs.

Ondovic has been through many ups and downs in the computer retail wars and said his firm's target client -- a business with 10 to 20 employees -- doesn't need the same instant gratification some consumers crave. "In general, our clients understand how we work and do not have a problem waiting a few days," he said.

Still, Apple's retail strategy is causing other changes, with consumers now less likely to turn up at his door, for instance. In response, Macs at Work is focusing on services and adding value to the products.

"We are adding new lines of business to continue offering new or better value to our customers," Ondovic said, such as a managed service line of business that provides around-the-clock monitoring, and a specialty in medical office setup and management.

Bellying Up to the Bar

The resellers could also try to emphasize some of the social aspects of the Apple stores, which often present workshops on various technologies and have become places for Mac lovers to meet and talk things over, noted NPD Group retail analyst Steve Baker.

"The sleek design is nice, but the ability to build the connection between the customers and the technology is what has the most value in the long run," he told MacNewsWorld. "It doesn't take a lot of high-end retail fixtures to create a place that people come to see as the go-to location for getting answers to their technology questions."

Likewise, the notion that Apple stores and resellers are staffed with genius-type experts on the brand helps set Apple products apart. Retail workers selling PCs at a big-box store may be expected to handle a half-dozen different brands and are likely experts on none.

"Apple resellers can benefit from that same laser-like focus," said Wolf.

'An Important Resource'

In fact, as an increasingly consumer-focused brand pushing deeper into music and video, the Apple reseller community becomes even more important, Baker added, to reach the business community and other important markets such as education.

The so-called long tail of the Apple retail strategy may benefit resellers as well, he said. As more users are exposed to Apple devices such as iPod and iPhones through its consumer strategy, business decisions makers are growing more comfortable with the Apple option in that setting.

While the moves Apple makes impact the small resellers -- Ondovic's decision to back away from retail came as the Apple stores began to arrive in Massachusetts -- the two groups also have a symbiotic relationship.

"I have been an Apple reseller for 14 years," he said. "I have always considered my relationship with Apple to be an important resource to my business."

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