Saturday, May 10, 2014

Apple/Beats deal won't be good for Target...

According to SFGate, Apple's rumored decision to buy Beats Electronics will not be good for big-box retailers like Target. Target and Best Buy - two big-box chains that have struggled in recent years to inject excitement into the notoriously fickle electronics category - recently struck partnerships with Beats to create special product displays inside their stores. If the acquisition speculation proves true, those deals will likely die, considering Apple is not only a top supplier to Best Buy and Target but also a top retail rival.

How times have changed since the 1990s and early 2000s. Back then, Apple - like any other manufacturer - was forced to sell products in chains because of the size, clout and reach of such retailers. But the late Steve Jobs, a notorious control freak, disliked the way those companies sold his products. Jobs, along with other vendors, resented how big boxes focused more on squeezing profits out of Apple than finding innovative strategies that put his products in consumers' hands.

"I remember going into a room with just me and a group of Target executives, including a senior vice president," said a former electronics sales executive who spoke on the condition of anonymity as to not affect business relationships. "They would say, 'Your price is a little too high,' and then send you out to a waiting room with seven other vendors, whom they told the exact same thing. It was great for Target, not so much for the vendors. Nobody liked it, but that's how the game was played."

So Jobs decided to change the game. With help of former Target executive Ron Johnson, he launched the Apple Store, which reinvented the shopping experience. Out went the checkout lines and employees who spent more time pestering shoppers to buy, buy, buy. In came the Genius Bar and that gorgeous shop architecture. 
Now the big-box world wants to copy Apple and create "unique experiences" for shoppers. As I first reported last October, Target has already remodeled the electronic departments in several of its stores with waist-height, bright white tables and displays — similar in style to Apple stores — to give shoppers more hands-on experience with the products. If the Apple/Beats deal goes through, Beats headphones will be one less product Target will be able to showcase.

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