Apple's Retail Attempt

Essay by jenlynch75University, Bachelor'sA-, April 2008

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In 2001, Apple Computer's CEO, Steven P. Jobs, had an idea to open posh Apple retail stores throughout the country. He felt that customers would be more apt to buy Apple's pricey, extravagant computers if they had a conducive environment in which to shop. In addition, he reasoned that exclusive stores would give Apple an opportunity to sell additional Apple products and services.

Though a number of Apple's competitors had successfully attempted retail outlets, Newsweek reported that David Goldstein, president of Channel Marketing Corp., predicted this idea would fail within two years. With or without retail stores, Apple Computer sold top of the line computers at a higher cost than their competitors, Dell and Gateway. The Newsweek article expressed a concern that shoppers would not purchase a computer system that cost so much more than the local competition, regardless of the shopping conditions.

A second concern was that Mr.

Job was targeting large metropolitan areas. Such real estate would mean higher lease expenses and salaries as well as escalated startup costs. Apple would have to sell, according to Goldstein, approximately fifty percent more than their competitors to simply survive. There were a number of obstacles to the store's success. The failure of these stores was inevitable according to the Newsweek article.

Apple's market share was low and falling quickly. Jobs' overall goal was to increase profitability by increasing Apple's market share. The idea was that opening these stores would create another way for consumers to purchase Apple's products and services which would contribute to their competitive edge. His plan to open 110 stores was aggressive and risky. Back in 2001, while Job was initializing this plan, his role of leader was evident. He had to motivate everyone within the company to accept this concept and support it through the...