“Apple” has informed distributors and trade partners in recent meetings that it is looking to set up exclusive 400-600 sq ft stores in neighbourhoods and some popular high-street locations…
They will focus on mobility products such as iPhones and iPads, besides entry-level Mac computers and iPods, said three of Apple’s trade partners aware of the plans.
“Apple wants to focus more on its entry-level models in these stores such as iPhone 4, iPhone 4s, iPad mini and iPad 2, which are essentially in the sub-Rs 30,000 segment and also its largest-selling products in India,” said a senior executive of a leading trade partner of Apple.
“The company feels these products are also attractively priced over competitors such as Samsung & Sony and hence being closer to the consumer will help to increase the conversion rate,” he said.
“Apple” wants to set up these smaller stores in areas where people have high disposable incomes, there’s a strong penetration of smartphones and a large student population such as Pune, Vizag, Guwahati, Durgapur and Gangtok.
Apple has not set any expansion target for the small-format stores. Apple declined to comment on queries regarding the plan. “We wouldn’t comment on rumours or speculation,” said Apple spokesman Alan Hely at regional headquarters in London.
The company has reached out to existing trade partners and multi-brand retail chains with its small-format store proposal, said the people cited above. One of Apple’s premium resellers, Currents Technology Retail, recently set up two such stores in Kolkata and Panchkula in Haryana. Currents is distributor Redington’s own retail format. Not all partners are enthused by the plan. One leading electronics retail chain decided not to take up the offer as profit margins on Apple are already among the lowest.
“After offering consumer discounts, the margin on iPhones and iPads is 2-5%, whereas it’s 7-10% for Samsung and other brands. Hence, it makes sense to continue with a multi-brand retail model where we can make more money,” said a senior executive at the retail chain.
An executive with another trade partner said Apple’s distributors want to ensure that the format will be viable, which could mean that the plan unfolds slowly.