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.

Comments

  • SenseOffender

    Here’s some reason’s why they should and shouldn’t:

    For: They could offer device manufacturers a window for devices networks don’t want to pick up

    Against: networks won’t be happy with the competition and they number of devices they choose to stock will probably end up costing them, should they not sell before newer models come out.

    For: a good starting point for new adopters to be educated

    Against: Too many people using android/google products and it will get confusing because the guys on hand will really need to know everything which the current fragmentation will not help with.

    The only way this works is if there are specialists in store who are trained by manufacturers on their devices, this could create a problem because it’ll create infighting between store staff who want to convince customers why they should by their manufacturers “android/google” device. Apple doesn’t have this problem, and thus the story begins/ends :(

    • http://www.facebook.com/people/Andre-Davis/100002263012722 Andre Davis

      Yeh I semi-agree with you. I can imagine a customer walking in with say a Sony Xperia which runs Android and the staff having no idea about all of its in and outs because everything is laid out differently then say an HTC Evo…

  • hoggleboggle

    A Google store would be pointless, a Android store however would actually work. It would basically be a shopfront for a selection of manufacturers working under the banner of Android. Partially funded by Samsung, LG, Asus, Acer and HTC it would work under the same principles as mobile phone stores (I left out Sony and Panasonic as they have their own stores), but with a wider selection. This would allow them to offer training and support for all Android customers, a key benefit of Apple stores. By combining google and their play store with the hardware manufacturers they can share the retailer’s costs and should be rather profitable.
    The next step I would like to see is all the phone manufacturer’s in the OHA come to an agreement to place their microUSB ports with the same orientation in the same location on the phone, thereby allowing cross platform compatibility for docks etc, the other major benefit that Apple has.

  • ifags44

    then apple will sue for -store- concept patient infringement…

  • stefano leva

    They absolutely should do it (and i’d like to open one here in Rotterdam!)

  • casinrm

    IMO, this could work but to prevent any infighting or confusion it would have to be Google devices only.
    That means Nexus 4, Nexus 7, Nexus 10, Chromebook, and Google TV. Those 5 should be the focus.
    Adding OEMs with skins into the picture only causes confusion over which device has what features and gets updates when.

  • Spencer

    They don’t need to worry about this for another year or so. When they do, it should be nexus devices only.

    • kbloodyk

      they should show off everything, not only nexus. they should market the latest android OS as well as selling a pro version Google account. they should also show off samsung, since it appears that they are google’s prime device builders.

      -KbloodyK

  • http://www.TheMentalClutterCoach.com April Welch

    I agree with all the previous comments {both for & against} but where I see this being a true value proposition is locations where Apple is not. Go to the rural communities, small towns places Apple is “too good for”. I’ve always seen Apple striving for the ‘snobby upper class’ customer base, or at least luring those in that want to feel that way. Google seems much more like the hard working middle class customer base, they work hard for their money and want the same luxuries but can rarely afford them.

    I say open Google stores either focused on the main products as :casinrm” recommends or open the Android store as “hoggleboggle” recommends either way keeping strategy focused on touch-and-feel shopping as well as education for new comers.

    IMHO

    • Vboom

      Don’t blame Apple for focusing on good business sense. Why would such a huge corporation waste their time opening thousands of little stores when they can open 5 in a major city and let smaller towns get theirs online? Apple stores and the recently opened Samsung store in Sydney (where I am based) are heavily staffed as is their nature so a low population town wouldn’t be financially viable for them if they wanted to keep the same standards as their CBD based stores

    • Jared Persinger

      most Apple owners can’t really afford it they just do it to put up an image

  • androidbrulatle

    Google store would be good for a retail presence and brand awareness

  • http://twitter.com/matter37 Matthew

    I would love this

  • David Rutla

    I would like to see this in NYC first since it’s one of if not thee most busy city for locals and tourist alike. It is the perfect place to test the waters, however…Apple who wants to sue you for even owning a fruit stand that sells Macintosh apples would claim some lame infringement and win. Maybe the store design is the same…sued, maybe how everything is displayed on a clear stand and black security lock on back is the same sued, Google store has glass doors with metal handles sued, Google has and Android bar…..sued

  • Dude

    Great copy iOS, why not Apple stores too.

  • lekimikel

    i hope they will also make its own store….please

  • Ram

    Google subcontract building of Hardvvare .. they have for no only 3 variants of Nexus and Chrome variant are not yet named after Google …….YYY on this earth they need a Store ? They are good Off Online Store .

  • Yvanho

    i wish they’ll use green t-shirt as opposed to blue

  • jojo

    would be awesome

  • kbloodyk

    I think this is a great idea for google, they could have a “concepts of the future center” were it’s a corner of the store that lets customers use and review prototype designs of devices and programs

  • SSIntimidator

    Except Gateway were the pioneers of this approach, not Apple. People seem to forget that…