Ever since Apple (Nasdaq: AAPL) rolled out its retail outlets, industry watchers have commented on how well Apple’s clean, streamlined products mesh with its clean, streamlined stores. To walk into an Apple store and buy a product is to have an experience that’s as carefully controlled as an Apple product’s design cycle.
So what to make of the recent news that Apple’s iPads will be available for sale at two of America’s leading discount chains, Target and Walmart? When you think of either store, you don’t think of glass staircases, maple-topped tables and hip employees whipping out their iPhones to ring up your sale. Why on Earth would Apple decouple the shopping experience from the $500 product it wants you to buy?
Because it will make Apple a lot of money, with a much wider audience than the early adopters who have already swarmed through Apple’s retail outlets.
That Apple will be selling its iPads in Target chains makes perfect sense. One of the ways Target differentiates itself in the discount-chain field is to emphasize its design savvy. Since its inaugural partnership with Michael Graves in 1999, Target’s racked up deals with luxury brands and well-known designers. This “cheap chic” strategy helped Target build a customer base that is generally profiled as younger, well educated and comparatively affluent. Folks shop at Target because they want attractive, well-designed merchandise without paying through the nose for it; they’re not necessarily there because they’re sensitive to low prices.
True, this cheap chic strategy bobbled badly during the recession–when price becomes the primary criteria for retail, aesthetic considerations take a back seat–but Target’s back on an upswing, and since shoppers seem inclined to spend more this holiday season, Target’s traffic and sales seem likely to rise.
Target’s well positioned to appeal to style-conscious holiday shoppers who want to feel as though they’re getting the most for their dollar. Apple pushing its tablets–all of which are cheaper than its computers, but just as well-designed–makes sense for the Target audience. This is a way to appeal to a design- and dollar-savvy crowd, and it gets Apple’s famously high-margin iPads out in front of folks who will still perceive them as a bargain.
But how do you explain Apple’s team-up with Walmart? After all, this is a discounter that stresses low, low prices over product design or customer experience. Since Apple clearly values–and tightly controls–both, what could possibly compel it to loosen its grip on the branded experience of buying an Apple product?
Try Walmart’s amazing ubiquity. There are approximately 221 Apple retail outlets in 41 U.S. states. By contrast, there are Walmarts in every U.S. State. By putting its iPads in Walmart’s approximately 2,500 outlets, Apple’s just managed to expand its distribution network tenfold without spending a dime–right in time for people to make their holiday wishlists.
By piggybacking on to the traits that each chain uses for its own brand identity–affordable design at Target, ubiquity at Walmart–Apple’s managed to broaden its reach and further decouple the Apple name from “computers” at the same time. If it has to loosen its grip on the way its customers get to its products… well, that may be a small price to pay for big, holiday-pumped profits.
