BusinessWeek slams Apple retail store concept

A recent commentary in BusinessWeek magazine takes Apple to task for its plans to open a nationwide chain of retail boutiques. (Alas, the article is currently only available to paid subscribers.)

Apple stores have a lot of appeal for solid business reasons -- they are a fresh retail channel for Apple, with better brand management and more controlled marketing than the company has ever experienced in the retail market before. And by cutting distributors out of the picture and offering high-margin products, Apple has the potential to reap some major rewards.

Regardless, says BusinessWeek, the stores are unlikely to "get Apple back on the hot-growth path." CEO Steve Jobs' perfectionism and focus is both a blessing and a curse, according to BusinessWeek -- it's resulted in profits and beautiful aesthetics, but "Apple's market share is a measly 2.8 percent."

The real underlying problem, asserts the magazine, is that Apple appears to be leasing space in very pricey retail areas. BusinessWeek uses the hotly rumored Palo Alto location, which carries a $1.2 million price tag, as an example.

"Since PC retailing gross margins are normally 10 percent or less, Apple would have to sell $12 million a year per store to pay for the space," said the magazine. Of course, that fails to take into account that Apple's margins are considerably higher than PC retailers.

BusinessWeek also asserts that Apple will jeopardize its relationship with other Mac-friendly retailers by competing with them. The magazine may have a point where mom-and-pop retailers and Apple specialists are concerned -- what few that are left, that is -- but the multitudes of Mac users who have been soured by mediocre or just plain miserable experiences with inept, ignorant, or openly Mac-hostile staff at computer superstores, electronics retailers, and department stores probably have a very different perspective.

"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," said the article.

BusinessWeek says that the time has passed for Apple to perform "covert operations" every time a new product is unveiled. One retailer suggests that Apple just work like everyone else and leak info about new products to build hype and help retailers clear inventory.

"Maybe it's time Steve Jobs stopped thinking quite so differently," concluded the commentary.

This story, "BusinessWeek slams Apple retail store concept" was originally published by PCWorld.

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