retail reincarnate 6 june, 2001 by johnmichael patrick monty monteith

Sometimes in the computer business it is hard to know whether you are coming or going. A few years ago peer to peer communications was called dead, last year it was reborn, and now it is sinking away again. Dial-up modems were pronounced dead, but suddenly some are realizing they will be the standard for a while to come. When Apple killed the Newton PDA many thought that only desktop systems could make money, yet seemingly everyone owns a Palm Pilot now. And, for the past few years, many have predicted the demise of retail. Especially computer retail. But perhaps it is about to be re-born.

In 1993 when I was managing a Software Etc. store I was assisting in the remodeling of a store in Bellevue Square. As with any store remodel, it was an expensive affair, and the idea was to take the store away from the discount techy look to more of a 'den', down-home feel. Give the store a feeling that all it is missing is a fireplace. I thought this design idea was brilliant, although Software Etc. only used it in one other store. (Doh!)

A customer visited me after the remodel and told me that we wasted our money since in a couple of years all computer stores would 'go under'. When I inquired his reasoning, he explained that he felt with the Internet everyone would shop online. He further explained that, in a couple of years, retail computer stores would disappear.

Of course, this gentleman was certainly a little ahead of his time. I believe he might have run off to start a little business called Amazon.com and helped to forever change the dynamics of retail shopping. As you well know, shopping today is much different from 1993. Suddenly everyone knows the invoice price of automobiles. Suddenly everyone knows the cheapest price for a stick of RAM. Suddenly everyone can get books for under the retail price. And with those changes many retail businesses have closed shop.

The state of retail was exemplified in a trip I took to CompUSA last week. A woman was trying to get help for her personal computer problem and the two salesman (in a rather large warehouse computer store) were more interested in chatting about the Mariners then helping the customer. Due to inexperience, if they did try to help, they would have only caused more harm. As she walked out the door she bellowed into the empty store, "I will never shop here again because of the service you give me." (Really.) Based on the retail computer store disappearing act, I suspect that most people are having the same problems. These stores have relied on prices that compete with the Internet while having to pay for a place to display the goods. This scheme has proved it impossible to stay afloat.

CompUSA is not the only company in trouble. Gateway Computer recently closed many of the Gateway Country Stores due to lack of sales. After all, if someone can buy the same product online for the same price or less, why bother leaving the house? What reason has Gateway given consumers to make the trek down to their stores? What is different from the Gateway retail experience from the online one? Nothing.

Those that predicted the demise of retail were not exactly correct. They should have predicted the demise of mid-level-discount retail, since that is what the Internet has replaced. What has survived? Obviously the Wallmarts of the world have not done too poorly since they beat the Internet at the price game. What has been a surprise is that upscale retail has thrived. Trendy, hip, warm, friendly, customer-service oriented retail is doing just fine, Internet or no. Visit the mall and you will find a significant number of hip clothing and specialty merchandise outlets that are bucking the retail trend. Unfortunately for CompUSA and Gateway Country, their outlets do not really fit into the upscale retail picture. In fact, they are not even close.

Yet, one computer company has decided to make a stand in retail with a hip store all their own. Apple Computer recently opened up a few retail outlets with a very warm, customer-service oriented feel. If you take a tour of the store with Steve Jobs, on the Apple web site, you will see how warm and creative the layout is. You will notice an innovative area called the "Genius Bar" that will answer any computer related questions you have. And if they do not know the answer? They can pick up the 'hotline' to talk to someone who will. They do not just carry Apple products, either. Certainly, all of the products need to work with a Macintosh, but they carry camcorders, digital devices, and hundreds of pieces of software made by third party companies.

At the risk of sounding like an Evangalista, for a computer store it is downright nifty. I just wish someone would open up a Windows version. Can you imagine how different an experience the woman that bellowed into CompUSA would have had in the Apple Store? She would have been a Macintosh user for life.

Now, even though Apple has noticed the trend of retail to move more high-end, it is still not a certainty that their experiment will work. Should they have opened in malls? Should they have had some new trendy designs? Perhaps they should have used a wacky store name like ZyApple? Who knows. At the same time that Gateway is closing stores, Apple is opening them, and this has many believing Jobs has been enjoying the wacky weed on lunch breaks. How else do you Think Different?

Still, I have not touched the wacky weed, and I still think he is on to something. Whether he has the magical ingredients is a big unknown, but I certainly appreciate the attempt. It is difficult to predict the way this industry will go. There are dozens of computer trends dieing right now that could re-invent themselves down the road, and even if Apple's retail attempt fails, an attempt by someone else later will be a success.

Oh, by the way.. That Software Etc store I helped remodel is still alive and kicking. Apparently that warm and friendly design has made it one of the most profitable in the chain. So much for the death of retail.