What Goes Around… Internet Giant Google To Open Stores?
Internet retailing, led by Amazon, has for some time seemed to take a lead role in increasing sales over its brick and mortar brethren. The term showrooming appears increasingly in retail news and of late on network nightly news. Companies, most notably including Target and Best Buy, have been openly searching for solutions to this very real phenomenon which purports that increasingly consumers, armed with smartphones and tablets, are doing their in-store shopping with an active eye to comparing prices on the Internet. In the many instances where the consumer finds a significant price differential which favors a visited web site, the click and mortar often wins.
Here, the brick and mortar has essentially paid its rent, electricity and payroll, among other costs, to serve as a showroom for online retailing. To make matters worse, consumers purchasing online often don’t have to pay sales tax. Given this data, why would Internet kingpins like Google and Amazon even consider taking a flyer on opening and operating brick and mortar retail locations?
Theoretically, the use of physical stores makes a lot of sense for retailers which have unique products to offer. Store locations also seem advantageous when a company seeks to distinguish its products from the pack, especially when new or changing technologies are involved.
Amazon’s Kindle is a good example here. Amazon’s ability to display its ever developing line of products in stores such as Best Buy and Target were crucial to gaining consumer confidence as shoppers really needed to distinguish readers and tablets from the wide and growing range of competition. As new products are introduced and evolve the increasing number of attributes and price points can seem staggering. As these products rapidly emerged from a luxury status to the perception of essentials, a new class of customer came into play. These consumers were often technologically challenged by emerging new product categories. However hearing the call that many tablets were increasingly intuitive and user friendly, they chose to jump into the purchasing frenzy. To do this however, a hands-on comparison of various products was essential.
While Amazon and Barnes and Noble were able to get their growing and ever more sophisticated readers into a number of brick and mortar chains the showrooming backlash became too much for some. Retailers led by Target dropped Amazon products pretty much as a no brainer. This lack of control of product distribution sent click and mortars back to their algorithm based drawing boards. So did the example set by Apple.
When word got out that Apple was going to open its own store locations, many retail experts scoffed as to how well a computer manufacturer could master the art of retailing. As this was well before the first iPhone which debuted long before the first iPad, many wondered how the company could even fill a modest sized store with its products, coveted as they were by a growing band of enthusiasts.
Of course few could have envisioned the many innovations Apple stores would feature as they opened initially. Those critics who appreciated the innovative store design, employee training and customer service did not see ahead to continued store innovations such as the now copied genius bar. If copycats are a form of flattery, Apple is only slightly appreciative as the company recently received a copyright for its store design. This has a range of companies from Microsoft to JC Penney taking note.
Now there is well-sourced word that Google is looking to open its own stores by this year’s holiday season. Google has a number of relatively new products on the market and is expected to be issuing still newer ones as the year unwinds. Its acquisition of Motorola portends a well-financed rollout of ever edgier android smartphones. While Google products are currently being sold by retail chains, the company is struggling to have its products standout in typical consumer electronics retail environment. Certainly well-financed Google stores should be an eye opener in the ever crowded field that is CE retailing.