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Apple Store Is No Threat To Mac Retailers: A Quick Note To The 'Mom & Pops'

MOA Apple Store Coverage - Apple Store Is No Threat To Mac Retailers: A Quick Note To The 'Mom & Pops'

by , 9:00 AM EDT, August 13th, 2001

Discovery consists of seeing what everybody has seen and thinking what nobody has thought.

Albert von Szent-Gyorgyi

(MINNEAPOLIS, MN) -- On Friday night, I had the pleasure to attend what I guess you could call a VIP reception for the new Apple Store here at the Mall of America, the nation's largest mall. Along with a select group of people from the local Mac retail and creative community, I was given opportunity to sneak peak at the store before it opened the next morning. What impressed me wasn't what I saw, but what I didn't see.

In the words of Martha Stewart, this is a good thing.

Sure, the store lives up to the hype that we've witnessed in prior news accounts. Sure, there is the signature "Genius Bar." Sure, the store is staffed with enthusiastic and knowledgeable Mac addicts. But I don't want to dwell on that. We have blow-by-blow accounts of all that elsewhere in today's edition of TMO. What I want to point out is something that should be reassuring for the Mac merchants who have stood by Apple through thick and thin, admittedly more thin than thick at certain times, and are growing more concerned every time Apple opens one more of the 25 stores slated for this year. I'm here to tell you that you don't have anything to worry about. Well, not all of you. More on that later…

After going through the obligatory "meet and greet" with Apple staff and subsequently guzzling my share of "adult beverages," we all paused to listen to Apple Senior VP of Retail Ron Johnson make welcoming comments to us guests. You know: "Apple is excited to have you here," yada yada yada. But notice what he said at one point in his talk: "we want to thank you and First Tech for being here. We really appreciate it." Now, this is admittedly a paraphrase of what Johnson said, but I clearly remember that he mentioned First Tech by name.

Who is First Tech?
First Tech Computer is the largest Mac "Apple Specialist" in Minnesota. This is common knowledge among the local Mac community. What I didn't know until Friday night is that this company is arguably the number three Mac reseller in the country, bringing about $25 million a year to the Mothership's coffers. This is big stuff. I wanted to follow up on this, so I spoke with a few of the First Tech employees in attendance. They didn't know that I was there in the capacity of a "sleazy columnist," so I hope that they will forgive me for divulging select tidbits from our conversations. Since I am leaving out all the trade secrets and secret marketing plans we discussed, I should be OK...

An interesting conversation with one First Tech employee contained an observation that could be very well microcosmic of the rest of the Mac retailing community: he said that when he first heard this notion of Apple opening its own stores, he was worried. But after attending Friday's soiree, his fears were allayed and shown to be unnecessary.

Less is more?
Remember, I said early on that what impressed me was what I didn't see, instead of what I did see at the store. Here's what I saw: the Apple Store is a great place for you to buy a Mac and Mac software, if that's all you want. That's about it. Plenty of software and every Mac product available for your purchasing pleasure. Of course, there's plenty of "digital lifestyle" devices, like Palm OS handhelds, and digital cameras, but the section for accessories is microscopic, compared to the rest of the store, even smaller, if you compare it to the inventory of accessories at the typical computer store. Another important thing is the service department, or the lack thereof. I came here positive that Apple would have a tech department. I asked several employees, including store manager Duke Zurek about their support setup, to make sure I understand what is their policy and staffing vis–a-vis technical support and repairs.

Essentially, they don't have a tech department. Granted, there are people on staff who can answer your questions, and there is a place where you can bring in your computer for diagnostics -- the manager stressed that they won't service any "beige" Macs (Performas, etc.) -- but the lion's share of repairs will be sent to Austin, Texas, or California. I was told that if it is an iBook, they won't even crack it open; off to the repair facility it will go!

This, too, is a good thing.

Somebody has to do all of that work
This leaves the Apple Specialists and VARs (Value-Added Resellers) to take care of this after-the-sale business. The Mall of America store will be a good place to hang out and get some warm Apple fuzzies, but, to be honest, I wouldn't drive from across town to make a Mac purchase, when there is a CompUSA or First Tech right down the street. After all, the Apple Store prices aren't any different than the third-party stores. For example, I spent time looking at products, especially those with prices I was familiar with. I looked at a few of the software titles, books, and peripherals, and noticed that prices ranged from about $5 above retail to $5 below.

So if you're shopping for bargains, this isn't the place for you.

This is where Apple and the third-party resellers will be able to live in peaceful coexistence. First Tech will remain the Mac choice for businesses. The Apple Store just isn't set up for handling business clients. The store I saw is perfect for the families, individuals and first-contact Mac customers (lovingly referred to as "scared rabbits"). There is plenty of money to be made outside the Apple Store's sphere of influence.

Example: I attended the Apple Store opening Saturday morning and went on to Micro Center, where I work part time and sold several thousands of dollars of iBooks and Power Macs, along with a PowerBook for good measure. Ditto for Sunday.

That was probably one of my best weekends in sales receipts.

But some retailers need this 'swift kick' called an Apple Store
Now, stores like CompUSA sell Macs hand over fist, in spite of themselves. I don't care what people say, some of the worst Mac shopping experiences are in the "premier" Mac outlets at CompUSA. You know the deal, so I won't delineate my frustration with those guys. Let's just say that Apple's decision to hire and train people to work those stores is so overdue that it's pathetic.

But, CompUSA is the biggest outlet for Apple exposure, so we will all be patient and let them learn how to take our money without trying to discourage us of our purchasing decision (let those who readeth understand whereof I speak).

I'm not Nostrodamus, BUT…
Give these guys six months -- hell, give them until Xmas -- and the Apple Stores will be hitting all cylinders as they fulfill their purpose in stride:

1) evangelize the Mac and the Apple brand
2) show the more pathetic resellers "how to do it"
3) stand as physical evidence that incessant reports of Apple's demise are exaggerations beyond belief

I envision the Apple Store to be a place where the tourists will shop. It will also be a place where Macophiles living outside the Twin Cities will shop for things Macintosh (I met several people from the Dakotas, Wisconsin and Iowa). Many people outside the Cities come here to make major purchases. These people often divided their money between a few local Mac retailers or the mail-order catalogs. In the scheme of things, this is money that the local resellers wouldn't get anyway.

The one thing I heard from the First Tech contingent was that the Apple Store isn't a competitor for business but a complement.

For example, as I left the store, I picked up my excellent Apple Store T-Shirt. I was also given a handout. It was announcing the Macintosh Home and Business Expo next month, where Twin Cities vendors and resellers will be able to display their wares, get the word out about their businesses and hopefully drum up some business.

The handout stated that the Expo is sponsored by First Tech. I think that tidbit foreshadows how the Apple Store will work hand in hand with the local vendors to sustain the current Apple market share and, hopefully, take it well beyond that five percent critical mass we now enjoy.

Just like the fact that people living in Las Vegas don't gamble, Rodney O. Lain never shops at the Mall of America, calling it an expensive tourist trap from hell. When he isn't dumpster diving for a new pair of shoes, he is a regular contributor to The Mac Observer with his "iBrotha" column. He lives in St. Paul, MN -- five minutes from the Mall of America.

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