Is It Google's Turn to Try Retail?

Better late than never. At least, that's what Google's (NASDAQ: GOOGL  ) probably thinking if the rumors about a move into retail are true. According to a "reliable source" at 9to5Google, Google is planning to open its own retail outlets by year-end. Though not entirely unfamiliar with retail -- Google has hundreds of existing store-within-a-store setups in assorted Best Buys -- developing its own stores from the ground up is another beast altogether.

Not as easy as it looks
Google's rumored move into retail isn't surprising, really, considering the steps its competitors are taking to put their stamp on the market. Apple (NASDAQ: AAPL  ) is the tech industry's poster child for retail success.

According to research firm Retail Sails, Apple stores led the entire industry in sales per square feet, generating more than twice that of its nearest competitor, Tiffany. According to Apple CEO Tim Cook, the average store generated more than $50 million in revenue, and at $6,050 in sales per square foot, that sounds about right. But as Cook said, "Others have found out [retail's] not so easy to replicate."

It's tough, but retail's a must-have
Apple's lofty numbers makes retail an enticing alternative for IT companies, and Google is just the latest tech behemoth with an (apparent) interest in retail. Earlier this month, Microsoft (NASDAQ: MSFT  ) shared its plans to plow full steam ahead into opening new stores. It will open 11 additional retail outlets by year's end, five more than it originally announced in December.

Additional ways to generate revenue are usually a good idea, and retail could end up being a goldmine for Google. But there's more to Google's retail aspirations than sales numbers: A physical presence gives customers the chance to play before they pay, which is becoming a necessity as the number of phones, tablets, and software alternatives continues to expand.

You'll never find Apple fans waiting to buy a Nexus, nor will you see Windows 8 aficionados toting around an iPhone, but the lines are blurring for the millions of other consumers without an allegiance. For many, the cost benefit of a slightly better screen resolution or faster processor speed versus saving hundreds of dollars simply isn't there. And with more options constantly being introduced, consumers need the chance to test the new devices and systems, which is why Google retail would make so much sense.

What a Google store might look like
There's no word on possible sites for Google's rumored shops, but there's no shortage of possibilities for the stores themselves. Google, as much as any tech leader, is on the cutting edge of developing innovative technologies. Rather than a new iteration of the same thing (iPhone17, anyone?), or a new, "world altering" OS (Windows 13?), Google is working on products like self-driving cars and "smart" glasses. According to the 9to5Google report, Google's retail discussions began with its decision to offer the latter technology, Google Glass, to consumers. With a price tag of between $500 and $1,000, not to mention the novelty of the Glass concept, customers will need to play with it before plunking down that kind of money.

Google's not the first tech titan mentioned in the same breath as retail, nor will it be the last. Making a Google retail experience unique would be key, much like Apple's done. Imagine wandering over to the prototype of Google's self-driving car, or getting snapshots taken by a hovering mini-drone, all while sporting interactive Glasses.

A Google store could be fun for consumers, but it'll be serious business for management should it come to pass. Showcasing new products and innovations, generating opportunities to differentiate itself from a slew of rivals, and staying at the forefront of the ever-changing tech industry all point to Google retail stores on the horizon. Hopefully for Google shareholders, the rumors turn out be true.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. With rumors swirling about Google retail stores on the way, it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2267566, ~/Articles/ArticleHandler.aspx, 7/23/2014 10:48:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement