Retail Apple Envy

The retail battle between computer brands is currently running in favor of Apple--and competitors are envious. Trends in distribution can change at the click of a mouse, but in recent years, Apple's showy retail stores have drawn crowds and brought the company big profits, even in the midst of uncertain economic times.

Over the years, the top computer brands have handled distribution in different ways:

• Dell originally restricted its distribution to direct customer contact only, which boosted profit margins and ensured control over the customer experience. No wonder Dell was considered a model of marketing excellence. Later, as competition intensified and volume expanded, Dell dabbled in retail "kiosks" that displayed but didn't sell its merchandise. Finally, Dell closed the kiosks and launched into more traditional retail distribution via established channels such as electronics chains and value-added resellers. It still sells the vast majority of products directly (through its Web site, Twitter, catalog, etc.), and its latest profit picture looks positive.
• Hewlett-Packard has a history of embracing established retail distribution and VAR channels, as well as direct sales (especially to corporate clients). At the height of Dell's sales and profit ascendancy, HP briefly emulated its rival in emphasizing direct marketing to consumers--but then shifted focus toward mainstream retailers such as Best Buy and Walmart, channel partners that bring their own brand strengths and customer base to the mix.
• Gateway (remember its cow colors?) began as a direct marketer and, by the late 1990s, was operating retail showrooms across the U.S. The ill-fated retail chain was costly and, although the aim was to increase customer contact with the brand and boost sales, the dot-com bust caused PC sales to plummet. Gateway closed some stores little by little and, while Apple's glitzy stores were overflowing with customers, all of Gateway's stores were gone by 2005. Gateway had acquired eMachines in 2004, but eMachines was itself acquired by Acer in 2007.   

Apple opened its stores in 2001 as an extension of the brand experience, a way to allow shoppers to browse, try, and buy Apple products in a retail atmosphere representative of the brand experience. Everything--from the Genius Bar to the back-pack bags--drips with Apple's design expertise and reinforces the innovative style-with-functionality for which Apple is famous.

Today, Apple has 300+ stores worldwide that are often jammed with customers waiting their turn to test out an iPad or talk with a Genius Bar genius about some glitch. Apple does sell direct, and through selected distributors, but its stores are wildly popular with customers who want to hold a product in their hands and take it home right after the purchase.

Until the distribution pendulum swings the other way, Apple is clearly winning the retail battle in the computer space.