Apple Retail is Key to Their Competitive Advantage

on June 5, 2011

Apple has several things I consider to be keys to their competitive advantage. Fundamental advantages that when you study become clear differentiators as well as roadblocks for Apple competitors. However if I were to prioritize, their retail strategy would be near the top as a key to their competitive advantage – here is why.

Retail Experience Matters

If you think about your electronics retail shopping experience, depending on the type of shopper you are, you either love it or you hate it. If you love it chances are you are tech savvy and you walk into the store knowing exactly what you are looking for, knocking sales people down as you go.

If you hate it or have bad experiences, the cause is typically because you aren’t sure what you are looking for and find very little knowledgeable help in making a decision. On top of that, you have too many choices and weighing the benefits of different brands, configurations, or specs becomes daunting especially when you have little help.

This is the brilliance of the Apple retail strategy. By controlling not only their own in store experience they have simplified how people shop, catering to those only interested in the Apple ecosystem.

This strategy is paying off. If you look at Apple’s retail stats from the latest quarter:

– 325 stores in 11 countries, 87 outside the U.S.
– Apple’s retail stores hosted 71.1 million visitors in the quarter, for an increase of 51% year-over-year
– Mac sales in our retail stores totaled 797,000, up 32% from the year ago quarter, and 50% were to people new to the Mac
– Apple’s retail stores brought in $3.19 billion in the quarter, which is a new Q2 record and a 90% increase year-over-year

Traditional US retailers could not provide stats anywhere near those numbers and those stats represent interest primarily in just one brand, Apple.

Retail is a Challenge for Apple Competitors

I interact quite a bit with all the manufactures of PC’s and other electronics. The challenge of retail is a constant conversation and frustration. Brands are competing for shelf space, discounts, promotions, signage, messaging and positioning and the list goes on.

Vendors like HP, Dell, Toshiba, Acer, Asus and soon to be Samsung are all fighting a political battle with their retail outlets. Yet Apple has none of these headaches and in their stores they have no competition.

In fact even in traditional retail outlets like Best Buy, Apple gets their own section. Part of this is Apple’s doing but its also because Best Buy knows how high in demand Apple products are and they want to move boxes.

This reality is very difficult to compete with, and I see no signs that this is changing anytime soon.

So here is to Apple’s 10th anniversary of their first retail store. I was of the many skeptics in the beginning but this strategy is one of the major contributors to their success and their brand loyalty.