Should Google Bother to Open Retail Stores?
Feb 19th 2013 7:05PM
Updated Feb 19th 2013 7:20PM
Rumor site 9to5Google.com recently reported that Google will open a chain of self-branded retail stores in time for the holidays this year.
The move would follow high-end retail king Apple in a big way. Cupertino collects about 12% of its massive sales via a global network of Apple stores. These locations also serve as a nerve center for promotional campaigns, technical support, and cultural presence. Since the first stores opened around the birth of the original iPod/iTunes phenomenon, it's difficult to tease out the nickel-and-dime importance of the store chain, but it's safe to call it a major factor in Apple's decade-plus of ground-shaking success.
But then, Google would hardly be the first copycat. Microsoft established its own retail presence in 2009. These stores were fairly obvious takes on the Apple concept, with wide open floor plans and a similar mix of technical and promotional content.
The campaign hardly seems worth Microsoft's attention: There are only 40 locations four years into the life of Microsoft's store concept. By contrast, Apple opened about 100 locations in its first four years and now runs nearly 400 stores worldwide. Mr. Softy isn't sharing any details on how well these locations are doing. You'd expect management to brag a bit if it was thumbs-up all the way.
Death, taxes, and retail success?
So there's no guarantee that Google's stores will automatically become massive profit centers or brilliant promotional tentpoles like Apple's. Microsoft showed that you can copy the idea without achieving Cupertino's success.
And you could argue that Google mainly sells online services anyhow. That's hardly the kind of goods you expect to find on a store shelf somewhere, backed by retail assistants working on commission.
But Big G is getting more physical, day by day. The Motorola purchase gave Google some direct skin in the smartphone and table games. The upcoming Motorola X handset might give Google its first blockbuster product in the physical world. And you've seen co-founder Sergey Brin sporting Google Glass digital eyewear in public. That product could certainly use some hands-on testing in order to score consumer sales.
Google could also hawk a wide variety of Android-based products not showcasing the Google brand, including the lukewarm Google TV platform. Further down the road, the company is working on (among many other strange things) self-driving cars, space elevators, advanced artificial intelligence, and green energy alternatives. Some of these projects may not be well suited for retail selling, but they could all use some space for promotion, demonstration, and explanation in high-traffic shopping malls.
Some day, Google will simply have to get into the retail game, like it or not. The former online search specialist is becoming too diversified to stay in its online cocoon much longer.
Right here, right now?
Is 2013 the right time to make the move into retail? I'm not completely convinced.
Apple demonstrated that it is possible to launch a world-beating retail presence at the same time as betting the company on an unproven product line (iPods!). The similarities run deeper than you might think. Google Glass might retail for $500 or so. The first iPod was an unqualified blockbuster at $400. Google would obviously love for the Glass gadget to become an iPod-style linchpin for a long-term retail and consumer-sales story.
But Apple started from scratch, the company still barely breathing after the near-death experience that Gil Amelio put it through. Steve Jobs only had two choices: Win or die. So Apple became an expert retailer out of necessity. It's like Hernan Cortes burning his ships to make sure his Mexican conquest would be free of distractions.
Google has a running start, which may sound like a big advantage. Apple already did the hard work of figuring out how to run a great store chain, and Google walks in with a big bankroll. Almost too easy, right?
But without that heart-pounding life-or-death focus, I'm not sure that Google will care enough to really make it work. Plus, the company has such an overwhelming online brand presence that consumers might just be confused by a physical store push. If I want to buy something from Google, shouldn't I just open a browser?
That's why Google should spend some more time cultivating its hardware brand before making the leap to your local mall. But it looks like the company isn't taking my advice. We common shareholders rarely get to run the show, after all.
It's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.
The article Should Google Bother to Open Retail Stores? originally appeared on Fool.com.Fool contributor Anders Bylund owns shares of Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.