Will Google create its own stores like Apple?

November 12, 2012
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Android is growing ever more popular, but right now the platform and the devices that run it are all sold by carriers or other retailers, unless you shop online. Despite having a line of products, Google’s direct Internet sales of Nexus devices have been relatively modest and there are issues with a standard carrier deployment. Moving beyond smartphones with the Nexus tablets presents a new challenge for a company that doesn’t have strong retail ties. Is it time that Google opened up physical stores?

Apple’s success story

In order to evaluate the prospects for Google stores we only have to glance at its biggest rival. When Apple introduced independent retail stores on the high street many analysts thought the idea was fatally flawed. Traditional retail was in decline, the idea of outlaying cash on prime commercial real estate and hiring staff looked like a step backwards to many. Fast forward a few years and Apple’s last earnings call revealed revenue of $4.1 billion for the quarter from 372 stores. That’s over $11 million per store for just a three month period.

You may assume that most of Apple’s hardware sales come through its retail stores, but actually that represents around half of all Mac sales, around 40 percent of iPad sales, and only 20 percent of iPhone sales. The value of those stores goes way beyond the direct sales and that’s why Google management should be seriously considering its retail strategy.

Image Credit: AFP

Advantages of physical stores

There are lots of advantages to having a physical store chain, especially for a trusted and respected brand like Google. The key factor right now is to allow people to come in and get a hands-on look at the hardware and the platform. The Nexus 4, Nexus 7, and Nexus 10, with the latest version of Android offer an unparalleled user experience. If consumers could play with the devices, get help setting them up the way they want, and see quick tutorials from trained staff, then all this talk of Android being less user-friendly than iOS could be put to bed once and for all.

We should also consider Chromebooks and the prospects of Google’s minimalist Chrome OS. The platform is ideal for a lot of consumers out there, but very unlikely to take off without a real push to educate consumers about what it does. Google stores would allow them to see it in action and staff could explain the benefits.

We know that online retail has impacted seriously on high street stores, but Apple’s example paints a different picture. With tech products people like to touch them before they buy, it’s part of the seduction process, and once you’ve held a desirable tablet physically in your hands it’s a lot harder to go home without it. Even beyond the selling side, a physical store allows you to cut return rates and solve problems customers encounter because they can drop in and actually talk to someone who can usually deal with their issue.

Throw brand presence and awareness into the mix, the buzz and excitement of events and launches, and consider the possibility that Google stores could also carry devices from other Android and Chrome partners, and you can see the potential.

Google isn’t Apple

One big spanner you could easily throw into the works here is labeled profit margin. Apple has a healthy profit margin on every product and the company isn’t shy about charging a premium. That cash makes an expensive retail operation with staff training and city center stores a viable strategy. Google is selling devices at close to breakeven prices.

There’s also the eco-system knock on which is clearly worth a lot to Apple with its walled garden approach. Google’s ongoing profit from Android owners is simply not on the same scale. Google would probably have to sell a great deal more devices to turn a profit than Apple does. There are other reasons why, even if it made a loss, it would be worth having a retail presence for Google, but are they compelling enough to persuade the balance sheet hawks?

Store within a store

The other approach is to have a branded presence within existing retail chains. Google already has plans for Chrome Zones which will be hosted in Best Buy in the U.S. and Dixons in the UK, but there is a reason that Apple moved away from this strategy. You have to strike deals with the retailers and you don’t have that same branded presence on the high street when you are tucked away inside another store. Compared to the consumer cathedrals Apple, and even Microsoft, has rolled out, the branded space seems like a weak alternative.

There’s also no presence for Android as yet and a Google store could really bring together everything the company does right through to Google TV and the complete suite of apps and online services.

Dipping its toe in the water

Google has experimented with pop-up stores around the world. They opened a Chrome Zone in London last year for three months in the run up to Christmas, but then closed it. The company also has plans for a big retail store in Dublin, but it’s not entirely clear if it will go ahead. It could also mirror the online store and focus on t-shirts and other Google-branded accessories. If you haven’t seen it before then follow that link for a bewildering array of Google umbrellas and lava lamps.

In typical Google fashion the company has remained tight-lipped on its strategy and we don’t know if the pop-up store experiment was considered a success or not. Is Google ready to dive into those retail waters? It doesn’t look like it right now.

Missing a trick

We’re used to hearing the claim that Google has fingers in too many pies so it might seem odd supporting another move into more unfamiliar territory, but there’s no doubt that it could do a lot of good for the company. Google is producing some of the best and most affordable hardware in the world, but it is hard for people to try before they buy. That retail space would really work well for the brand and capitalize on a sizable existing fan base. It would also enable staff to evangelize and explain Google’s many products and services.

One thing is for certain, whether it is through branded stores or deals with other chains, Google needs more of a retail presence to expand its hardware empire.

What do you think? Would you like to see Google stores on the high street? Post a comment and weigh in.

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