Store Wars: Apple vs. Microsoft

Rob Enderle

One of the interesting things that you'll be able to watch shortly is the store wars between Apple and Microsoft. I've been a big fan of the Apple stores and actually did the opening for CNET radio of the Palo Alto store live from the store. Apple certainly has done a fantastic job with the properties, a fact that has a great deal to do with Apple's success this decade. However, just because someone does something well doesn't mean someone else can't do it better. It is interesting to note that evidently some Apple attorney called Microsoft to beg the company to stop running its competitive ads (some real irony here, given Apple's own Mac vs. PC campaign). I hope that attorney has fun in his next life because I'll bet Jobs is not pleased. But it showcases that Microsoft is kicking it up a notch and now will be going into branded retail stores. Let's chat about that a bit.

 

Inside Apple's Brain

 

Microsoft recently announced that it will be placing stores right next to Apple stores in an attempt to steal traffic. Not a bad idea, since Apple did a substantial amount of analysis on locations prior to placing its stores and has refined that analysis over the decade to replace or move the underperforming ones to better locations. As a result, Apple stores now represent a physical map of many of the best locations in the world to sell PCs. The layouts of Apple's stores are designed to showcase Apple wares, which are largely hardware based, and the groupings are by line and activity. You typically see each product group showcased together, and then you have areas where photography, or printing, or some other task is exemplified with the products Apple is applying to the task. Often, software is centralized and organized by type. This layout fits Apple's model but wouldn't work well with what Microsoft needs to do, so the inside of Microsoft's stores will look vastly different.

 

Microsoft's Edge

 

While it is always fun to make fun of Microsoft, realize that over the last several years Microsoft has built one of the most, if not the most, advanced technology-focused retail labs in the world. It is the most impressive I've ever seen of its type -- and I used to co-run a large lab myself. It has brought in leading retail specialists, university study groups, and researchers to conceptualize what an ideal retail store for personal computers, peripherals and software might look like. It then brought through large retailers who both learn from and contribute to the mountains of information and analysis developed in the lab. This was initially to help retailers better shelve, showcase, and more effectively sell PCs, peripherals and software. Designs were intended to address both the efficiency and quality of the buying experience. In addition, shrinkage, which is a problem for the retailers, was also addressed in the prototype designs so that retailers could help make sure that inventory didn't grow legs and theft could be better managed. Design efforts not only focused on store layout but shelf design and presentation of the various products in order to minimize the pain of shopping in them and maximize the revenue.


 

The Microsoft Store

 

Unlike Apple, which seeks to provide a premium experience, the Microsoft model is to focus on high value and customers who like bargains and bundles. Both vendors have and will stress simplicity and an easy path to purchase in their respective stores. As a result, when you walk into a Microsoft store, you will see an organizational structure that is closer to Best Buy than it is to a typical Apple store. Products are grouped by family and with the accessories and software that they will likely need. Specialized products will be aggregated by line and placed in areas, kind of like the Apple stores, that highlight the related activity. So, for instance, with laptops you'd see laptop bags, laptop software, mobile mice, and products grouped by similar model. The ultraportables would be grouped with other ultraportables, and luggables with other luggables. This is so you can easily compare like products and find the accessories most likely to work with the product you are considering purchasing.

 

These stores, like Apple stores, should have well-trained experts and, unlike most Apple stores, a rotating staff of third-party vendor representatives, all of whom are more expert than your typical store employee. Like the Apple stores, you'll see activity groupings for things like multimedia (Zune instead of iPod), photography and education. But because there will be far more products in the Microsoft store, the layout won't be as open.

 

Who Wins?

 

This is where it gets kind of interesting. Maybe both Apple and Microsoft win. Think of the concept of an auto row, where competitors group together so that potential customers know where to go to shop. By putting the Microsoft and Apple stores side by side, there is more reason to go where both stores are and the available traffic of people interested in either should go up. If Apple is too expensive, you go next door and shop at Microsoft. If you want a premium experience and are willing to pay for it or want an iProduct, you gravitate to Apple. You'll probably even see folks shopping in both stores for things that interoperate, like MP3 players, printers or cameras.

 

Wrapping Up: Lessons Learned

 

What Apple initially did and Microsoft is emulating is that before either company went into retail, they did a substantial amount of research. They then hired leading retail specialists to develop a retail plan, and only then did they execute. The end result for Apple was what is arguably the best retail PC store experience on the planet. Microsoft is attempting to better that but this approach allows it to also enter this segment as an expert. The approach that paid strong dividends for Apple should work for Microsoft as well and be used as a template for anyone else looking to do something outside their normal comfort area.



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