Apple at Target looks like a retail expansion bullseye

Building on a long run at Best Buy, Apple's dedicated space at the mass merchant gives many of its most important products the Apple Store experience shine.
Written by Ross Rubin, Contributor

Whether it be in a flagship location such as New York City's Fifth Avenue or its many mall-based locations, the Apple Store provides a meticulously constructed showcasing of the company's platform products. For those who've decided that they want to buy the latest iPad, iPhone, or Apple Watch, it's tough to beat Apple's retail home turf on experience.

However, not every buyer operates with such certitude, and not every electronics buyer buys at malls or Apple stores. For about a decade, Apple has operated a store-within-a-store at Best Buy; the partnership expanded in 2019 to include authorized repairs at every Best Buy in the U.S.. One pre-pandemic account estimated that Apple accounted for up to 20% of the revenue at Best Buy stores and drove significant foot traffic to the retailer. A growing retail trend, stores-within-a-store have become a pillar of Best Buy's retail strategy, allowing it to escape the fate of competitors such as CompUSA, Circuit City, and Fry's.

Apple also has a long history with Target, the employer of Ron Johnson before he became Apple's founding retail chief. As a general merchandiser, Target attracts a different kind of regular traffic than the Apple Store or Best Buy. According to data from research firm Numerator, Target shoppers are more likely to be younger, have kids, and earn over $80,000/year (and even more likely to earn over $100,000/year) than the average shopper; these are all characteristics that favor Apple purchases.

Nevertheless, according to data from my firm Reticle Research, a greater percentage of purchase intenders of non-Apple products in major categories, like Windows PCs and Android phones, are likely to consider Target than those of their Apple-intending counterparts. Target could provide an opportunity to intercept such shoppers. Furthermore, while the improving post-pandemic retail landscape has lifted all boats, malls face a future that relies less on shopping, And while the Apple presence has launched in fewer than 20 Target stores, Target's footprint offers plenty of room to grow. Target has almost 2,000 stores in the U.S. as opposed to about 1,000 Best Buys and fewer than 300 Apple Stores. 


Conceptual rendering of Apple Experience at Target

And so, earlier this year, Apple and Target launched an effort to bring some of the Apple store-within-a-store advantages to Target. Whereas at Best Buy, Apple's retail neighborhood includes dedicated spaces for Microsoft, Amazon, and Google, all of which offer products that often undercut Apple's, Target hosts Apple's embedded presence with brands such as Ulta Beauty, the Disney store, and Levi's. Of these, only Disney is a marginal competitor to Apple as far as its streaming video service goes. But what kind of experience will customers have as Apple steps up its Target presence?

Crowdsourced data firm Premise, which gathers data from contributors accepting simple real-world tasks, recently sent members of its panel to about half of the initial Apple stores-within-a store; they reported favorable impressions. Most who had visited an Apple Store said that the Target locations looked just like one. About two-thirds said staffers asked if they could help the shoppers with a particular question. And a bit less than half of the contributors became aware of an Apple product they hadn't known about. Most significantly, though, about four out of five said that the store resulted in a better presentation of Apple products versus those of competitors that may play on a more level playing field at Best Buy.

While Apple's product selection at a Target store can't be expected to match that of an Apple mall store, it can still be a good showcase for many of its more mobile products, including AirPods, iPads and of course iPhones. Some scenarios, such as a serendipitous search for an accessory, could be more conducive to a Target location than an Apple Store. And, as at Best Buy when it comes to Apple's growing services revenue, Apple could benefit from having staffers available at a venue that sells non-Apple platforms for Apple subscription services such as Apple TV+ on Roku devices.

For a brand like Levi's or Disney, setting up shop inside a Target simply extends a retail footprint, a relatively small slice of its overall revenue picture. But for Apple, the partnership with Target represents what may be the last step in a quest to provide as consistent a customer experience in the U.S. as possible across all of its major retail channels: first-party and Amazon e-commerce, first-party physical/mall, electronics big box, and now general merchandiser.


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