May 7, 2001 3:40 PM PDT

Apple to open first store

Apple Computer has confirmed the launch of its first retail store, in what is expected to become a nationwide chain of outlets.

The first store will open May 19 in McLean, Va., according to an invitation to a press event scheduled ahead of the launch. Along with the upscale Tysons Corner shopping area--where the Apple store will be located--McLean is also home to the headquarters of the CIA.

An Apple representative declined to offer any details on Monday, beyond confirming the May 19 launch of the McLean store just outside Washington, D.C.

As previously reported, Apple has been laying the groundwork for more than a year on a strategy for its own retail presence. In late 1999, Apple hired Allen Moyer, a former Sony executive involved in retail projects such as the futuristic Metreon retail-entertainment complex in San Francisco.

Apple has started work on a site in Palo Alto, Calif., and is reported to be taking space at locations in Littleton, Colo.; Chicago; Bloomington, Minn.; New York; and Phoenix, among other spots.

Needham & Co. analyst Andrew Scott said the stores will help Apple in its key task, attracting first-time Mac buyers. Many Macs are sold at stores that also carry Windows-based PCs, with salespeople often steering first-time buyers toward those PCs.

"Right now, the customer experience for new users in purchasing an Apple is poor at best," Scott said.

Opening its own stores will give Apple the ability to show off its machines and let prospective buyers try out new software, such as iMovie and iTunes, he said.

"You need to play with them" to appreciate them, Scott said. "The stores give you a chance to do that."

If the Apple invitation to the press is any indication, the Mac maker will be urging computer buyers to "Shop Different"--a play on the company's long-running "Think Different" ad campaign.

Scott added that with the opening of Apple's own stores, the company may rethink its store-within-a-store program at CompUSA. Apple may decide to close some stores or put its own sales force in the stores, Scott said.

The company has already said it is winding down its relationship with Sears.

Apple's decision to open its own stores is already raising the ire of Mac dealers.

So far the company has not discussed its plans with its network of resellers. One dealer, who is in the general area of the Virginia store and asked not to be identified, complained that even on Monday the company had no details for its retailers.

"It's going over like a lead balloon," the reseller said of Apple's announcement.

Among the key questions yet unanswered is just how many the stores Apple plans to open and whether they will carry their own inventory.

David Bailey, an analyst at Gerard Klauer Mattison, said Apple's goal appears to be more about showcasing its products than about grabbing sales from dealers.

"It's as much about marketing as sales," Bailey said.

Although it is not clear just how many stores Apple will open, Scott said the scope appears to be about right.

"If they launched 300 stores in the next year, that would be a problem," he said. Scott also said he expects some turnover among Apple's new stores.

"Starbucks opens stores and then closes the ones that don't work," Scott said. "Surely, Apple is going to have stores that don't work as well. Hopefully the majority of stores will be money makers."

 

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