As malls close, big box stores try to shrink and the overall prospects of physical retail range from stagnant to apocalyptic, there’s one sector of the market enjoying an unlikely growth spurt: stores opened by the big technology companies. Apple has spawned about 400 Apple Stores in the last decade, Microsoft is opening new locations, and now—according to tech blog and news reports—Google is developing plans to open showrooms in the U.S. to highlight its own devices running the android and Chrome operating systems.
Far be it for us to cast aspersions on the retail ambitions of big technology companies. (“I give them two years before they’re turning out the lights on a very painful and expensive mistake,” one retail expert told us, of Apple, back in 2001.) Certainly Google is doing just fine without the hassle of being a merchandiser: it has the most well-trafficked real estate on the Web and enjoys healthy distribution in electronics outlets like Best Buy. It also has close relationships with its carrier partners, such as Verizon and AT&T, which have their own ubiquitous stores.
But over the past few years, Google has been making more of its own hardware, and it can use additional help reaching customers. It started selling many of its Nexus smartphones and Nexus 7 small tablet itself, primarily online. These devices have been modest successes, but as Apple has shown, having a direct channel to the Internet can help immeasurably. “Historically Google has had trouble selling stuff directly to customers online,” says Greg Sterling, a senior analyst at Opus Research. “Apple is obviously a model of enormous success with its retail strategy and if Google wants to do it right and invest in it, it can be a big boost for the brand.”
Google is now making even more of its own hardware, via its Motorola, Android and Chrome divisions, and a physical store can cast those devices in the best possible light. The company has already been experimenting with temporary “pop up” stores in airports and store-within-a-store configurations in Best Buys.
The best reason to open stores may be all the secret projects still gestating in Google’s far-out think tank, Google X. Google Glass, the Internet connected eyewear being touted by co-founder Sergey Brin, is the most obvious example. The eyeglasses place a tiny computer screen in the corner of the wearer’s periphery, which is controlled by his or her voice. Customers will need to test this slice of the future to believe it’s even possible – and worth risking the inevitable look-at-the-dork reactions from people in the real world. By opening its own stores, Google will be able to control the demo experience for Glass, rather than relying in Best Buy blue-shirts in noisy box stores.
Sterling says that one day Google might even use these locations to offer customer service to small and medium-sized business owners, on advertising products like Adwords. “I think there’s a lot of stuff they can do with stores, physical presence, that would extend beyond selling handsets,” he says. This is a company known for experimentation. You can do a lot of that when you’ve got nearly $50 billion in cash, which Google has, including short-term investments. This morning, GOOG topped $800 a share for the first time ever.
For now though, Google is likely studying the case-studies from rivals, where opening physical locations didn’t quite work out. PC maker Gateway flubbed with its line of stores a decade ago; Sony has more recently been closing Sony Style stores. But both of those companies suffered in part from lackluster products. That’s the real bottom line: if Google builds devices worth checking out, customers will flock.
