Will This Strategy Push Samsung Ahead of Apple?

Apple (NASDAQ: AAPL  ) makes it look easy. Simply announce the launch of the newest version of an iPhone or iPad and stand back: Consumers will automatically begin queuing up outside a store to be among the very first to get the latest and greatest in technology. 

So successful has Apple's retail strategy been that Microsoft (NASDAQ: MSFT  ) believed it could simply copy the playbook page by page: Feature open floor space displaying the latest products to touch and play with, while providing an Answer Desk instead of a Genius Bar. Microsoft will end 2013 with 83 brick-and-mortar stores in North America -- it opened 35 of them this year alone -- and already has plans to open three more in 2014, though that's still a far cry from the 416 Apple stores in operation.

Similarly, Google (NASDAQ: GOOGL  ) is dipping its toe in the water, having opened six pop-up stores this year, though they are also reminiscent of Apple's design, including the streamlined number of products on display and the minimalist feel of the space.

So it should comes as no surprise that Samsung (NASDAQOTH: SSNLF  ) now feels it's incumbent upon itself to also explore a retail initiative, even going so far as to hire former Apple retail-store designer Tim Gudgel to help lead the way. If that isn't indication enough that Samsung is preparing to leap feetfirst into retail, then his reporting to former Apple director of retail Michael Forrest should be a clear sign the tech company is serious about the move.

Yet what's apparently not so obvious is that while Apple blazed the trail beginning in 2001, it's not so easy to replicate its success. Despite its expansion, Microsoft hasn't proved that it's been able to do more than photocopy the design. While it has a specialty store in New York City's Columbus Circle, it closed its Times Square location in January, arguably an important spot for retailing its wares. 

Google, with only a handful of pop-up stores to its name, may be trying something different with its floating barges, but that remains a big question mark because it may not have the permits necessary to stay put, let alone operate as a floating retail location. 

While a retail spot gives consumers of these tech giants a better hands-on feel for their products, it requires more than products on display, derivative store design, or even innovative settings like shops out to sea to make a go of it. After all, tech is littered with companies that tried the retail route and failed, including CompUSA, Sixth Avenue Electronics, and Circuit City. Certainly Microsoft, Google, and Samsung have the financial wherewithal to carry a losing game plan longer than some retailers, but that doesn't mean it's a good idea or will lead to success. Thus far Microsoft's results suggest a mediocre return while Google's reticence to go further underscores the challenges a retail store represents.

Although Samsung has largely eschewed the fixed retail location, preferring to rely instead upon partners like Best Buy (NYSE: BBY  ) to do its heavy lifting through stores-within-a-store in all 1,000 or so Best Buy locations, the tech giant began dabbling with pop-up stores last year and its latest moves suggest it wants to do more. It could also spell trouble for the electronics retailer, which derives nearly half its revenues from computing and mobile phones and has branched out into specialized outlets itself through its small-format Best Buy Mobile stores. 

Regardless, Apple's seeming loss of "cool" coupled with Samsung padding its technology lead spells more trouble. According to the market researchers at NPD Group, while Apple sells more tablets than any of its competitors, its percentage of the total market has shrunk to just 15.8% from 17.1% as Google Chromebooks surged to more than 9%. And comScore says that although Apple remained atop the U.S. smartphone market for the three-month period ending this past October, adding 0.2 percentage points for a 40.6% share, Samsung grew faster, adding 1.3 percentage points for 25.4% of the market.

While a new Samsung retail presence might be nothing more than Apple leftovers, it means the pressure on Apple to remain the iconic leader will heat up again in the near future.

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Comments from our Foolish Readers

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  • Report this Comment On December 31, 2013, at 11:32 AM, TypicalAmerican wrote:

    The Samsung stores will be an easy one for them - Just replicate an Apple store, but put a Samsung logo on the front. Later, deny it's the same because some of the inner work(ers/ings) are not identical.

  • Report this Comment On December 31, 2013, at 11:48 AM, riwaterman wrote:

    Article not thought through

    Yes Apple makes it look easy. When you have the best products and the stores are operated well it is easy. How to make it easy, not easy.

    Have you been to a Microsoft store. Right, no one else has either. Well some people do but in my area the MS store is virtually always empty but at the same time the apple store less than five stores away is packed.

    Have you checked out a Samsung store In a best buy? Same as a MS store nobody in the area. It's a dead zone.

    Samsung is spending what is it $15 billion on advertising and yet they are in crisis mode and revenues are dropping like a giant Samsung tablet.

    Go ahead Samsnung set up some stores spend some more money foolishly.

  • Report this Comment On December 31, 2013, at 11:53 AM, bobbydig wrote:

    Has anyone ever been in a Microsoft or SONY store? Can you say empty. Why? It's not just about opening a store. Its the end to end experience that is expected once you walk into an Apple store. You can copy a material object, but you can copy a human experience.

    BTW: After how many years did it take Google to get some to buy a Chromebook? It is so over due, the numbers still suck and a its truly piece of crap. Remember NetBooks?

    Happy New Year

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