Best Buy reported quarterly earnings today, and the company still shows slower profits and reduced same-store sales. The company’s results were slightly less bad than Wall Street expected, but the overall trend is obvious and inexorable: e-commerce is transforming retail as we know it. But is it the end of retail? No.
One company that is doing fantastically well at retail is Apple. And it’s being imitated by companies like Microsoft, Sony, Samsung and even, rumour has it, Amazon, who are building a retail presence.
Why is Apple retail doing so well and Best Buy doing so badly, and what does it have to do with e-commerce?
Best Buy tries to make comprehensive selection one of its key comparative advantages, but that’s something where it can’t win against the internet. Meanwhile, of course, Apple stores carry only a very small number of products. Even more importantly, Apple stores are an experience to go through, with wonderful design. And they have famously helpful sales staff, the genius bar who will fix your computer, and programs and services like Mac classes you can sign up for.
While Apple worship and imitation is a tired cliché in internet analysis (Apple stores also have the benefit of selling fabulously high-margin products), Apple retail clearly shows that smart companies can actually take advantage of omnipresent ecommerce and win in physical retail, by focusing on providing a special experience and outstanding service.
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