Here's the problem. When Apple set up the retailer deal for BB to be the premiere non-Apple "on the street" retailer, they explicitly or implicitly tied their brand to Best Buy's.
The research indicates the iPhone makes up most of the BB's Apple sales. But then Apple distributes iPhone fairly indiscriminately. They didn't need a reseller arrangement like they have for BB to sell iPhones.
Originally staffed with Apple salespeople, Apple was the centerpiece of the BB's computer department (in the trial stores) and visually still is. But from the start, Apple complained about the profitability of the partnership so pretty quickly the Apple staff was gone. So too is the inventory - including third party accessories and products - and BB sales people knows little if anything about the product line.
Empty shelves and no product sales support helps neither BB nor Apple. Apple can still realize strong BB iPhone sales without compromising their brand.
Why hasn't Apple pulled out of Best Buy? Maybe they just haven't gotten around to it? Doesn't sound like Apple – even without Jobs – where patience is not necessarily seen as a virtue. They must be waiting it out for a strategic reason.
They may want to hook Maybe they have contractual obligations? Apple's holding all the cards - Best Buy has no leverage. Contracts are broken everyday.
Maybe they're actually seeing significant profit from their Best Buy presence? According to CIRP (Customer Intelligence Research Partners), BB had 13% of all iPhone sales as of March 2012. By October the numbered had dropped to 10% and is still declining.
Why hasn't Apple pulled out of Best Buy? Maybe they just haven't gotten around to it? Maye they have contractual obligations? Maybe they're actually seeing significant profit from their Best Buy presence?
Mitch (and any interested internet evolution readers) – just read a few good articles you might be interested in that relate to our posts back and forth on Best Buy. Here are the links.
This next one I threw in because although our posts didn't specifically address it, I've been wondering why Apple hasn't pulled out Best Buy yet. BB has given the boot to having a dedicated Apple salesperson in the store. Instead, its now using it's own pc-centric-based sales team who knows virtually nothing about the Apple products. BB has virtually no inventory of Apple anything, so why bother being there – it's certainly not for good PR it generates on Apple's behalf.
Physical retail has several essential qualities that can work in its favor and that online retail just can't replicate: The customer has the opportunity to see and touch the product. The store has the opportunity to make shopping a pleasant experience through environment and friendly sales associates. Informed sales associates can help the customer make a decision. And the customer has the opportunity for immediate gratification, walking out of the store with merchandise in hand.
Unfortunately much retail has been moving in the opposite direction, with understaffed and uninformed sales associates, unpleasant retail environments, and –– in the case of electronics stores –– everything chained down so you can't get a good sense of how things work.
Mitch you're right, that is baffling. I can easily see why a Finnish retailer would set up shop in Hong Kong but I've never known Helsinki to be a shopping mecca!
Anyway, I think there's quite a bit of value in brick and mortar retail. But, it will be an ever-increasing challenge for them to continue to be profitable.
Yeah, I've seen those rumors too. It would be a very interesting development if it actually happens.
I talked to another retailer today that's seeing benefit to its brick-and-mortar stores from doing online sales. The retailer is Hong Kong Department Store (which is, bafflingly, located in Finland).
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