Apple and Wal-Mart: Do Opposites Really Attract?
Wal-Mart wants to grab the slice of the electronics pie that Circuit City gave up when it became financially insolvent, and it’s redesigning its stores to put itself in a better position to do so. Approximately 3,500 stores will be getting electronics department-centric makeovers this week, according to AppleInsider. The redesigned spaces will also feature in-store brand-focused boutique areas, like those found at Best Buy, for Apple and Nintendo, among others.
Unlike Best Buy, however, Wal-Mart currently doesn’t offer any Apple hardware beyond the iPod and iPhone line. Barclays analyst Ben Reitzes thinks that’s about to change. He sees the move to a specialized electronics “store-within-a-store” model of doing business as a precursor to the introduction of an expanded line of Apple offerings from the giant U.S. retailer, which would include desktop and notebook computers.
Reitzes basically sees Wal-Mart’s retail floor upgrades as a way to appease the very brand-conscious Cupertino, Calif.-based electronics company. “We believe Wal-Mart is actively pitching Apple to carry more products,” he said. “With Wal-Mart improving its retail displays, we believe that the mega-retailer could eventually earn the right to sell select Mac products without diluting Apple’s brand.” Thinking back to my last shopping experience at my hometown Superstore, I’m not sure how successful Wal-Mart can be at avoiding absolutely any and all brand dilution.
Which brings us to the real question: What does Apple stand to gain from an expanded partnership with Wal-Mart? Or, more importantly, what does it stand to lose? First, Apple probably aims to do the same thing it did with the iPhone by offering Macs at Wal-Mart, which is to avoid sales slowdown or stagnation. It makes sense, because what better way to put your products in front of more people than by offering them through Wal-Mart, whose reach is massive?
That said, will improved exposure alone be enough to make it worth Apple’s investment? Wal-Mart is, after all, first and foremost a discount retailer. People shop there because of the low prices, which often come at a steep cost to manufacturers. I doubt Apple would undercut its price points, considering its general reluctance to do so in the past. That would make it a premium-priced brand in a retail environment that specifically caters to bargain hunters and frugal consumers. Not only would that not really benefit sales, but it could actually hurt them, since uniformed consumers looking only at price tags will behave like Microsoft’s Laptop Hunters when presented with both alternatives on the same hyper price-focused sales floor.
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MattF on May 20th, 2009 at 12:38 pm
There’s opportunities for both Apple and Wal-Mart, but they have to be careful. Apple would like to push a bit out of its premium niche, Wal-Mart envies Target’s “quality for less money” vibe. I doubt that Circuit City is the model here, smart retailers like Apple and Wal-Mart understand that Circuit City deserved to die. It’ll be interesting to see what happens.
Joseph Michael on May 21st, 2009 at 11:51 am
I think in the long run it would hurt Apple, Wal-mart carrying apple helps to dilute a great product. Apple must avoid selling themselves to thin.
Partners in Grime on May 23rd, 2009 at 10:38 am
Maybe I’ll finally have a reason to visit Wal-Mart. :)
Roger S. Cohen on May 24th, 2009 at 4:59 pm
I visited our local Wal-Mart (Airmont, NY 10901) and looked at their electronics department. What a mess!
There are plenty of TVs, all dirty, some working, some in operable. The display of Apple products is largely empty. Those Apple products that are there (behind a locked glass case — no iPhones) are hanging by a thread, dirty, inoperable and inaccessible. The display of accessories for iPods is properly organized — for all four items. There were no accessories for iPhone.
And… apparently no one works in the Wal-Mart electronics department.
It may be true that Apple wants to sell iPods and iPhones in geographic areas where there is no Apple Store. But they are not likely to sell many. There’s no way to buy Apple hardware in the local Wal-Mart.
Roger S. Cohen on May 24th, 2009 at 4:59 pm
I visited our local Wal-Mart (Airmont, NY 10901) and looked at their electronics department. What a mess!
There are plenty of TVs, all dirty, some working, some inoperable. The display of Apple products is largely empty. Those Apple products that are there (behind a locked glass case — no iPhones) are hanging by a thread, dirty, inoperable and inaccessible. The display of accessories for iPods is properly organized — for all four items. There were no accessories for iPhone.
And… apparently no one works in the Wal-Mart electronics department.
It may be true that Apple wants to sell iPods and iPhones in geographic areas where there is no Apple Store. But they are not likely to sell many. There’s no way to buy Apple hardware in the local Wal-Mart.