Apple (NASDAQ: AAPL) has finally found someone to head up its retail operation: Angela Ahrendts, the now-former CEO of luxury brand Burberry. Many observers have lauded the move, going so far as to declare her a potential CEO-in-waiting.
Regardless of her success (or failure), I think the more interesting angle is what Ahrendts' hiring says about Apple's strategic priorities. Although many investors may see the future of retail -- particularly electronics retail -- as existing wholly online, Apple continues to emphasize its bricks and mortar operation. That's great for Best Buy (NYSE: BBY), as competitors like Samsung (NASDAQOTH: SSNLF) continue to follow in Apple's footsteps.
Apple's retail operation gives it a strategic advantage
Apple's recent resurgence has largely been the byproduct of fantastic, innovative devices -- the iPhone and iPad. Many Apple enthusiasts would argue that these products sell themselves, and to some extent, that's probably true. Still, I don't think Apple's retail advantage should be overlooked.
I remember, years ago, struggling with Dell tech support. Fixing a problem or asking a question was a chore, a hectic phone call -- Apple's retail operation changed all that. With the Genius Bar, owners of Apple products know that getting tech support requires nothing more than making a quick trip to the mall.
Apple's CEO Tim Cook has gone further, explaining that Apple's stores act as a sort of community center -- a gathering place where people can get together and tinker with Apple products.
Samsung follows Apple with Best Buy partnership
In its ongoing quest to compete with Apple, Samsung has built its own retail operation, complete with similar kiosks and knowledgeable Samsung employees. But rather than build this operation from the ground-up -- something that Apple has been doing for over a decade -- Samsung partnered with Best Buy, opening mini Samsung "Experience Shops" in Best Buys across the US.
That move was enough to interest executives at Microsoft, as the Windows-maker announced a similar, albeit smaller partnership, just a few months after Samsung and Best Buy made their deal public.
Samsung could be looking for more. Samsung's vice chairman told The Korea Times that he had recently met with Best Buy executives to discuss pending business issues. That led to a rumor that Samsung was considering buying a stake in Best Buy outright, but both companies denied it.
There's still a place for physical stores
Nevertheless, it makes sense for Samsung to double down on its Best Buy deal. As the company branches out into new areas of consumer tech, including its brand new Galaxy Gear smartwatch, it needs a retail arm now more than ever.
Even the most die-hard Samsung fans will probably want to see the Galaxy Gear in person before spending $299 on a radical new device. The same might be true for future Samsung gadgets, like its curved-display smartphone. Where better to test them out then the dedicated Samsung store in their local Best Buy?
Certainly, Apple isn't giving up on retail -- I doubt Ahrendts, who made $27 million last year, came cheap.
More than anything else, it's clear that there's still a place in the market for bricks and mortar electronics stores.
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