Blog Post

A Target expansion would broaden Apple’s halo effect

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Apple (s aapl) could add considerably to its retail reach, if a new report out Friday is accurate. According to a “source familiar with Apple’s plans,” AppleInsider says Apple will bring store-within-a-store retail outlets to Target (s tgt) locations sometime soon, helping it reach markets Apple’s own stores don’t cover.

Apple initially intends to open mini-store locations, like those it currently uses at select Best Buy(s bby) locations across the U.S. and Canada, in 25 Target locations in areas where a standalone Apple Store isn’t economically viable, according to the report. Target has 1,752 stores currently operating in the U.S., more than Best Buy’s roughly 1,100 locations. Apple now has store-within-a-store setups in more than 600 of those Best Buy locations.

Target stores currently offer iOS devices, including the iPod and iPad, as well as the iPhone in stores that have Target Mobile sales centers. The rumored expansion would allow the 25 pilot stores to begin offering sales of Mac computers, as well as other Apple-branded hardware and peripherals. Bringing Macs right into the stores could help capitalize on the so-called “halo effect” of iOS devices, which sees Mac sales increase in proportion to the iPhone and iPad’s success. Customers who come in to Target for an iPhone would be more likely to at least take note of and consider a Mac purchase, too, since all those products would be available for hands-on trial in one place.

This isn’t the first time people have suspected a limited retail partnership would lead to something larger. Back in December 2008, Walmart (s wmt) began selling iPhones, and then in 2009, Barclays analyst Ben Reitzes suggested that along with iPod sales they would be precursors to the store-within-a-store model being adopted at Walmart locations. So far, that hasn’t happened, but there’s good reason to suspect Target is a better candidate for this kind of setup.

The main reason is that Target appeals to a different demographic than Walmart. Target’s crowd tends to be closer to Apple’s core market audience, namely middle-class buyers with more cash to spend. Selling Macs, which are for the most part much pricier than iOS devices, is a good fit for Target’s customer base, especially in places Apple’s own retail shops can’t reach.

Photo: Some rights reserved by Chris Coyier

7 Responses to “A Target expansion would broaden Apple’s halo effect”

  1. They already do that in other countries. In Japan there is an exact replica of a mini Apple store in every BicCamera, which is one of the biggest electronic retailers, at list in Tokyo. Even the furniture is the same in those mini branches, with Apple staff to seve you, so no surprises here!

  2. The key will be in HOW the in-store concept is realized. Geek Squad’s move into Best Buy wasn’t the best idea, with both companies asking why people in black ties are just standing around while the blue-shirts and the store itself were busy. Why? Because people looking for the latest game or DVD, or maybe some printer paper, aren’t also looking for someone to troubleshoot a wireless router setup. For that, they would, you know, call the Geek Squad number. By contrast, Starbucks has been pretty smart to setup shop in select grocery stores, knowing that people shopping for food might also want to drink coffee too. It seems like a simple equation, but is actually pretty easy to screw up. If branded and displayed prominently, and located well, people will notice and potential customers from within your known demographics will be drawn into even a Target to look for the Apple Store-in-a-Store and buy something — but again, ONLY if (a.) there’s no real Apple Store anywhere else nearby, and (b.) if the Target store is located in areas with populations that would normally be served by Apple Stores proper (but which may just be too small, tightly populated downtown areas, or in areas with no available other inventory) to support a full Apple Store. In other words, unless the location is already appropriate for a real Apple Store – and the only reason one isn’t there already is one of the very specific reasons noted above – putting an Apple Store-in-a-Store there probably won’t work. Demographics is demographics. Location is location.

  3. PC Easy

    I will never step foot in Target ever again. Go over the electronics section and good luck getting someone to get you an electronic device. When you finally get someone, you better hope they are either in a good mood or not helping another customer. The other frustrating thing are there non-target employees selling phones and when you ask for help with non-phone products, they can’t help you. Just a terrible experience. Oh and another thing, when I finally when to purchase my electronic device, the associate told me that there was a 6 item limit for the other items I wanted to purchase. So, I left about 25 bucks (about 5 other items) on the floor since he wouldn’t let my buy them because of their stupid limit.

  4. FreedomMMC

    This is my documentation for my prediction of an APPLE fall from grace. Currently their stock trades at $420/share they will give some of that back this year.

    Why? Deals like this that don’t match how apple worked when steve jobs was around. what i’m saying is no steve jobs no awesome apple. They struggled when he left the company before they will struggle again.