Electronics manufacturers are getting into the retail game, using small, stylish stores to add an extra dimension to their sales appeals. The operative terms are “connecting” and “experiencing.” The strategy has spawned minis and microminis — smaller facilities located in street-front settings as well as in urban and suburban shopping centers.
Major electronics companies are counting on super-sleek interiors and a cadre of friendly, “I'm-here-to-answer-your-questions” helpers as important components to branding. They fall into two camps: stores (places that sell merchandise) and “unstores” (those that do not) and are designed to appeal to both women and men. This recognition of the buying clout of females, long neglected by the gizmo- and gadget-maker community, is one of the reasons for the rapid growth in the number of high-concept electronic product destinations.
“It's all about building the brand,” says James Rosenfield, national director of retail services for Cushman & Wakefield Inc. Showcase stores being built by Apple, Sony, Nokia, Nextel and Sprint get people excited about the product and how it relates to their particular lifestyle, he says.
Samsung, for example, has opened a 10,000-square-foot, demo-only “Experience” store on the third floor of The Shops at Columbus Circle in the new Time Warner complex in New York City. It's a permanent “unstore” that allows consumers to test, try and even borrow the latest products, with no pressure to buy.
And more concepts are on the way. The latest entry is Sprint, which has hired California architect, Richard Altuna, to redesign its stores. Altuna's spaces will be transparent, to alleviate the fear many have of complex phone gadgets. Visitors can even watch technicians repair cell phones. Also, a new branded transit station, Nextel Central, formally opened on the Las Vegas Monorail route in mid-March. Designed byfirm Gensler, the space includes the station, a flagship retail store, product showcase area and flexible exhibition space.
The future looks bright for most new entries. Related Cos., developer of the Time Warner shops, has created a new unit, Related Experiences, to pursue more tenants like the Samsung Experience. Tim Hindert, Related Experiences president, sees the Samsung store as a harbinger. “It lets the retailer or the brand showcase its products and lifestyle through multiple channels, and the consumer enjoys the experience and benefits from the information,” he says. Related is looking for more “experience” centers for developments in Los Angeles and Las Vegas.
The high-tech centers are powered by the sophisticated electronic networking at many new malls. “Today, we have to offer a physical infrastructure in all locations that is technology friendly to attract tenants like Samsung,” says Hilbert. Up to $20 million can be spent for connectivity, he says, to drive sound, video, media delivery systems, Web links and broadcast capabilities.
David Magee, who follows the electronics market for SunTrust Banks Inc., Atlanta, says the smaller, ultra-design format facilities are a win-win for the brand and the shopping center operator. “These are high-visibility locations, appropriate for the product,” he says. “The stores are distinctive and a link to the brand in the shopper's eyes.” Backed by financially strong corporations, they are a welcome addition to a shopping center's tenant roster.
These avant-garde stores are bringing in traffic. For example, the Samsung Experience, designed by Imagination (USA) Inc., has been featured in the “Places to See in Manhattan” lists supplied to visitors.
They key is making the experience as interactive as possible. To that end, Samsung leans on a director of content for its stores, Eduardo Braniff, who along with senior designer, Leslie Willett, created stores that are elegantly slick but not daunting to navigate. Meanwhile, Samsung's on-floor product consultants are called “brand ambassadors” in an attempt to counteract the image of pushy salespeople. They work with one visitor at a time, a practice which serves to eliminate the pressure to make a sale.
“The space is dedicated to moving the public's perception of Samsung and its products into the upper leagues of consumer electronics,” says Braniff.
Similarly, cell phone powerhouse Nokia supports its brand with six Experience Centers, “where visitors can feel free to browse, touch and experience the full line of Nokia products on their own or with the help of an Experience Center guide,” a Nokia spokeswoman says.
Experience Centers are located in The Stonebrier Centre, Frisco, Tex. (where the first location opened in October, 2004); Spring Hill Mall, West Dundee, Ill.; Garden State Plaza, Paramus, N.J.; Pembroke Lakes Mall, Pembroke Pines, Fla.; Fashion Show Mall, Las Vegas and Park Meadows Mall, Littleton, Colo. The centers come in two sizes: mini, a 256-square-foot concept, or micromini, which is only 140 square feet. Design features include frosted glass, curved surfaces, hardwood floors and attractive lighting fixtures that draw customers inside.
“They are zero-pressure environments,” she says. The guides can direct consumers to nearby retailers where specific products can be purchased. Nokia plans a major rollout of 25 Experience Centers in a dozen markets in the U.S. and Canada by the end of 2005.
Apple at the Core
The pioneer in this field is Apple Computers and its wildly successful Apple Stores, of which there are now more than 100. The firm's most recent experiment is with mini-stores, which average 750 square feet. With their stainless steel walls, seamless white floors and ceilings, they are an extension of Apple's much-admired industrial design esthetic. Common design elements are used in full-line and mini stores to maintain visual identity.
There are nine small-format Apples in operation. The company's popular Genius Bars are in the minis. The Geniuses are black-clad tech support staff offering operating advice and taking in repairs (usually a one-day turnaround) from behind a sleek barlike counter.
Each week, 100,000 people visit the Geniuses, both walk-in and by reservation. Apple has urban stand-alone stores such as the branch housed in a converted post office in New York's SoHo neighborhood, and in fashion-oriented malls like The Grove in L.A. In Palo Alto, Apple operates a full-line store on University Avenue, plus a mini in a nearby mall. A mini has been opened in Santa Rosa, to serve this smaller market. Other locales include Cupertino, Calif., Tukila, Wash., and Bridgewater and Rockaway, N.J. “Minis afford a big experience in a small space,” says Ron Johnson, Apple's senior vice president of retail.
“They're more boutique than big box, and service makes a difference,” says PC World columnist Rebecca Freed. “Unlike the cluttered basement that is my local CompUSA or the migraine-inducing cacophony and horrible lighting that assault me when I go to Best Buy, Apple stores encourage browsing and trying products, without the prospect of leaving feeling drained and ill.”
The other pioneer in this sector is Sony, which established its Sony Style concept in Canada 15 years ago. As part of the wave sweeping the U.S., Sony is spreading its stores across the nation. An ambitious schedule calls for 30 by 2006. Its high-end electronic boutiques let buyers sample gadgets in comfortable, well-staffed settings.
Dennis Syracuse, Sony's senior vice president of stores, points out that the company's product designs can hold their own with merchandise carried by such mall neighbors as Gucci, Banana Republic, Neiman Marcus and other icons. “We decided to target U.S. malls with the most dollars and visitors per square foot,” he says. He estimates that each store attracts 400,000 shoppers annually.
Sony's New York flagship on Madison Avenue opened a dozen years ago, followed by Sony Metreon in San Francisco seven years later. The suburban expansion began in the fall of 2003 with South Coast Plaza in Costa Mesa, Calif., followed by Palo Alto, L.A., Boston, Houston, Orlando, Las Vegas,and Detroit. Designers for Sony Style facilities is the Toronto-based Kavacon, Inc.
Hardwood floors, a crackling remote-controlled fireplace and a 61-inch plasma flat-screen TV make a cushy mock family room in the Sony Style Concept Store that opened at the Stanford Shopping Center last summer.
The upscale floor plan lets visitors imagine Sony products in their own home.
Dell, the nation's No. 1 computer manufacturer, doesn't have stores, but operates nearly 100 mall kiosks. It still does most of its business by the Internet and telephone. But the kiosks allow potential customers to get a test drive.
Meanwhile, PDA-maker palmOne Inc. is racing to open smaller, boutique-style outlets in upscale locales. To make visitors feel at home, its stores are designed as cafés. There are now over a dozen since the first opened in 2001. The company's goal in selling directly to the consumer is to keep the focus on its brand. The product's image, execs believe, tends to get lost amid the wide array of items displayed in the typical electronics retail outlet.
While these stores continue to proliferate, simply having electronics in a hospitable setting doesn't guarantee success. Gateway Inc., for example, shocked the industry last year when it announced plans to close all 188 of its Gateway Country stores due to the chain's eroded brand equity and financial troubles.
Gateway's entry was closer to an ordinary retail location meant to hawk wares. The new boutique philosophy is the opposite, based on the premise that you're better off selling cell phones and computers in an atmosphere that demystifies technology and enables consumers to get hands-on experience. But there was also a merchandising issue. Unlike Apple, with its unique product, a Gateway computer isn't that different from a Dell or Hewlett-Packard PC. In addition, Gateway's lure of a customized approach never caught on with PC buyers.