Technology continues to change the way consumers shop for products. While some retailers have seen sales rise in the single-digits, others are experiencing e-commerce growth in the double-digits. However, despite the advent of e-commerce the need to physically see a product or try on clothing will never go away. It is for this reason that there will always be a need for consumers to at least be able to try out a product. This means that Apple (AAPL +1.18%) stores essentially show the future of retail.
A computer company opens a retail store
Believe it or not, The Apple Store wasn't always considered a brilliant idea. In fact, the overall reaction when Apple announced that it would open a retail store could best be described as surprise. What the world didn't know when the company opened its first Apple store was how much it would change retail as we know it.
That first store in Tysons Corner, VA, paired with the second Apple store located in Southern California, earned just under $600,000 in sales in the first two days of business. That turned out to be just the beginning. Fortunately for Apple shareholders, Apple's retail division now consistently ranks at the top of lists of sales per square foot for retail outlets. Not only that, it has started a trend that could be nothing short of revolutionary.
See in person -- buy online
Go to your local mall today, and you will likely come across not only an Apple store, but also a Microsoft Store and possibly a Sony store, as well as a host of other retail outlets that seem to have a lot in common with Apple. The amazing fact here is not only that Microsoft and Sony have resorted to copying Apple's success by opening their own branded stores, but that Express (EXPR +0.00%), The Gap (GPS +3.89%), and The Buckle (BKE +1.75%) are also benefiting from online shopping.
|
The Buckle |
The Gap |
Express | |
|---|---|---|---|
|
FY 2012 Revenue Growth |
5.74% |
7.63% |
3.7% |
|
FY 2013 Revenue Growth |
0.36% |
3.19% |
2.87% |
|
FY 2012 Ecommerce Growth |
8.4% |
18.75% |
32% |
|
FY 2013 Ecommerce Growth |
5.3% |
21.1% |
25% |
While these retailers obviously still do the majority of their business the old-fashioned way -- selling inventory displayed in their stores -- they are benefiting from a trend that Apple started. The American consumer clearly still needs to be engaged, though, with a physical presence of some kind to see and experience new items in the physical world. However, after the establishment of product suitability, consumers have no problem buying online.
Consumers are walking into an Apple store to test out the latest iPad or walking into a Microsoft store to test out its products, and then they are, in most cases, purchasing the products online. This trend is also taking place at Express as customers try on its apparel in stores, and later visit the store's website to purchase the items and have them shipped to their homes. The Apple Store has truly strengthened online retail sales for lots of retailers by showing how consumers can test out products firsthand before buying them.
Imitation is the sincerest form of flattery
This trend toward smaller stores that are more geared to allow product testing is just getting started. Another concept that is becoming more popular is placing a smaller version of a retailer's store inside of a larger one. For instance, Sephora is opening small stores within J.C. Penney stores. In addition, Best Buy Mobile Stores, which are geared toward allowing people to try out mobile devices, have started popping up in malls as well.
Even Teavana (of Starbucks) is like the Apple store in a way. Customers can taste free samples of tea, talk to employees about the different options available, and even try out tea sets at their local Teavana, much like how at an Apple store a customer can test out an iPad or an iMac floor model while talking to one of the store's employees about its many functions.
Foolish takeaway
Given the overwhelming success of the Apple store and the copycatting that has followed, it's not hard to imagine a world of smaller floors where demo models of products abound. You can then order the products at the actual store or online. Either way, this plants the seed of purchasing the product in a unique, smaller, and engaging retail location. This model will also lead to inventory savings for companies as they won't have to stock large stores. Look out investors, because this trend is just getting started, and you should focus on those companies that are making efforts to generate more e-commerce growth.
