Apple and Circuit City to make a second go at Mac sales

[AppleInsider]

It didn't work five years ago, but a rejuvenated image and fast-approaching holiday shopping season have returned Apple Computer to Circuit City, where this month it will again try its hand at selling Macs.

Starting next week, a handful of Circuit City stores in the eastern U.S. will feature a selection of Macs including MacBooks, Mac minis, MacBook Pros and iMacs, AppleInsider has learned. The initiative is part of a new pilot program, which if successful, Circuit City hopes to expand to many of its retail stores, people close to the electronics retailer have said.

Last week, select Circuit City employees were sent to Apple's headquarters in Cupertino, Calif. where they were paired with Apple Solution Consultants (ASCs) for a week-long training expedition. The goal of the program was train Circuit City reps to effectively market the Mac and its strong-points, rather than lure prospective buyers towards their own familiarities in the Windows PC isle.

"This is a pilot program that's just getting underway and we will evaluate how it is doing over the next several months," Circuit City spokesman Jim Babb told AppleInsider. He added that in addition to Macs, the retailer would also stock select Mac software titles and accessories.

Circuit City, the nation's second largest consumer electronics retailer, and Apple, the world's most recognized niche computer manufacturer, have run this course before. In July of 2000, the two companies announced they were teaming to offer Apple’s iMac, iBook and AirPort products throughout Circuit City's then 570 retail stores. But with Mac maker cutting the ribbon on 27 of its own retail stores the following year, the two companies mutually decided it would be best to go their separate ways.

Things could play out differently this time around, say insiders. With its brand now booming and the first signs of Mac market share gains peering through the clouds, Apple is reportedly considering a move that would pull ASCs from CompUSA boutiques -- a deteriorating model -- and reassign them to trendy Circuit City posts. Insiders say the Mac maker's relationship with CompUSA has been waning with each new Apple retail store it launches.

The move into Circuit City is just on facet of a much broader strategy from Apple, aimed at increasing the number of worldwide distribution points for its Mac product line. While the company's iPod digital music players can easily be located in over 40,000 shops, there are only about 7,000 locations where customers can purchase a Mac; and even fewer where customers can first take one for a test drive.

Earlier this year, Apple began testing a similar pilot at select west coast Best Buy locations. Like Circuit City, Best Buy has indicated that it is prepared to scale the pilot program "rapidly" if results prove strong. During a conference call in July, Apple said was "evaluating results" of the program but had nothing new to announce at that time.

An expanded deal with Best Buy, which operates more than 900 outlets nationwide, could add more than $400 million to Apple's top line each year, analysts have said. Circuit City, though smaller, could prove to be an equally fruitful venture with 600+ locations.

[ View this article at AppleInsider.com ]

[SpamSandwich]

Circuit City is kinda like the JC Penney's or Kohl's of consumer electronics. They always seem like they're a heartbeat away from bankruptcy.

[ricksbrain]

Until Apple makes it worth their while, like other pc makers, third party sellers are not going to push Macs because they don't get as much commission. Unless, of course, the public KNOWS it wants an Apple computer and can't be swayed by the pimply-faced decepticons who are "helping" them.

[bballdude0507]

I live in the midwest (michigan) and my bestbuy has macs now...

[watashi]

last time cc was supposed to renew their Mac push, i applied for a part-time position, practically volunteering my time (four hours in their store wouldn't earn me what 45 minutes overtime at my normal job would have).

the manager pulled me into the office and told me straight to my face that he didn't care how knowledgeable i was about any product -- it was obvious that knowledge didn't matter -- the only goal was that a service plan walked out with every purchase. he told me he didn't get where he was by caring about the products or even knowing as much as the customers. he said he had a pitch for the service plans and that's where he made his money and how he had become manager in such a short time. he didn't care what the customer was looking at, just sell the service plan.

it was rather discouraging, to say the least. i told him that i didn't believe in service plans and could never sell one, then i stood up, thanked him for his time and left. they had someone else call me a week later to see if i was still interested in the job as my application and interview were favorable. i couldn't even come up with anything funny to say, i was so caught off guard. i simply said i didn't have time.

do they still intend to compete with AppleCare?

sorry, but for a lot of people now there are Apple stores within driving distance. i doubt anyone who is really interested in buying a Mac is going to buy a Mac from cc (except for possible extended, no/low interest payment plans). i expect, like last time, the cc workers will try to "switch" those interested in Mac to a more "bang for your buck" PC (it won't be so easy now with intel inside). i can't see how it could work out any better this time.

like stated elsewhere, i always expect to see the cc building up for lease. i can't see how anyone can stand to be assulted by the "salespeople" and actually complete a transaction.

all of this should have been expected considering the fact that you could only get the "e-one" e-machine knock-off of the original imac at cc and they had them sitting in the exact spot where they had previously had the last all-in-one Apple products.

[terin5124]

this is going to be a disaster. almost everyone has their preference, mac or pc. now people who don't know what computer to buy will walk out with a mac or pc depending on which sales rep they get.

aghh. well, its good for me. i'm in louisiana and the closest apple store is in houston, 4 hours away. at least i have a compusa about half an hour away that sells mac.

[Ireland]

There is load of "whole" countries in Europe with absolutely no Apple stores, WTF's with that??

[mcloki]

It's about the bottom line. CC knows they are going to sell few to no PC's this holiday because Vista isn't on these machines. No computer sales makes Circuit City cry. So someone in the head office says lets sell Macs instead they may be the only viable solution for computer sales this holiday season. Sure Vista coupons will be all the rage.
And yes i too believe that CC is in trouble. But since about 40-60 percent of their cash is made after Thanksgiving. Who knows it may be a HDTV Christmas.

[reidster]

It will be interesting to see if InterTan follows suit and adds macs to The Source by Circuit City's product line. There has been talk of late of Apple products "not related to iPods".

[melgross]

Originally Posted by watashi

last time cc was supposed to renew their Mac push, i applied for a part-time position, practically volunteering my time (four hours in their store wouldn't earn me what 45 minutes overtime at my normal job would have).

the manager pulled me into the office and told me straight to my face that he didn't care how knowledgeable i was about any product -- it was obvious that knowledge didn't matter -- the only goal was that a service plan walked out with every purchase. he told me he didn't get where he was by caring about the products or even knowing as much as the customers. he said he had a pitch for the service plans and that's where he made his money and how he had become manager in such a short time. he didn't care what the customer was looking at, just sell the service plan.

it was rather discouraging, to say the least. i told him that i didn't believe in service plans and could never sell one, then i stood up, thanked him for his time and left. they had someone else call me a week later to see if i was still interested in the job as my application and interview were favorable. i couldn't even come up with anything funny to say, i was so caught off guard. i simply said i didn't have time.

do they still intend to compete with AppleCare?

sorry, but for a lot of people now there are Apple stores within driving distance. i doubt anyone who is really interested in buying a Mac is going to buy a Mac from cc (except for possible extended, no/low interest payment plans). i expect, like last time, the cc workers will try to "switch" those interested in Mac to a more "bang for your buck" PC (it won't be so easy now with intel inside). i can't see how it could work out any better this time.

like stated elsewhere, i always expect to see the cc building up for lease. i can't see how anyone can stand to be assulted by the "salespeople" and actually complete a transaction.

all of this should have been expected considering the fact that you could only get the "e-one" e-machine knock-off of the original imac at cc and they had them sitting in the exact spot where they had previously had the last all-in-one Apple products.

You don't realize it, but Apple pushes their service plan as well. They all do.

[Ireland]

Originally Posted by terin5124

this is going to be a disaster. almost everyone has their preference, mac or pc. now people who don't know what computer to buy will walk out with a mac or pc depending on which sales rep they get.

I take it you must think Apple selling Mac's is not good thing? The customer could say: What's the difference with P.C. and Mac? The sales rep. could respond: Well P.C. tend to cost less, but Mac's don't get viruses, and are easier to use.

[SpamSandwich]

Originally Posted by Ireland

I take it you must think Apple selling Mac's is not good thing? The customer could say: What's the difference with P.C. and Mac? The sales rep. could respond: Well P.C. tend to cost less, but Mac's don't get viruses, and are easier to use.

...or they could say, they cost the same and they both run Windows... can I wrap that up for you ma'am?

[JoelS1044]

I live by a CC and use to wrok next to another one. The one I worked by went out of business and the one I live by never has any cars in the parking lot, but I believe it is still open. The Best Buy is always busy.

[scotty321]

This won't work, just like the Best Buy program doesn't work.

1. Apple doesn't pay the salespeople commissions; all the other PC companies do. No incentive in the world for them to sell Apple products.
2. There's no Mac software at Circuit City & Best Buy.
3. Nobody that works at Circuit City or Best Buy knows anything about a Mac.

It's as simple as that.

Hell, I heard Best Buy salespeople telling people to buy some crappy MP3 player that was supposedly "better" than the iPod. Why? Because they got commission to sell that MP3 player.

Thank God Apple opened up their own retail stores, where the truth can finally be told.

[SpamSandwich]

Originally Posted by JoelS1044

I live by a CC and use to wrok next to another one. The one I worked by went out of business and the one I live by never has any cars in the parking lot, but I believe it is still open. The Best Buy is always busy.

Similar to where I am. 1 closed Circuit City, and another that looks like a ghost town most of the time and has demoralized salespeople and scattered few clueless customers.

[Mr.Scott]

Originally Posted by JoelS1044

I live by a CC and use to wrok next to another one. The one I worked by went out of business and the one I live by never has any cars in the parking lot, but I believe it is still open. The Best Buy is always busy.

Same here in Oklahoma. The only Apple store is in an upscale mall. Which is cool, but a bitch of a drive and during the holidays...well don't get me started. We have a CompUSA here too and to tell you the truth, Apple is in the corner of the store and with very little marketing. It looks like when you walk into Wal-Mart. They hit you at the front door with crap that you don't need and as for Mac software or hardware or anything that is compatible with mac..good luck pal.

There are two CC in town and both are just like what Joel1044 said, ghost towns or are in a bad part of town. I just don't even think of going there to buy anything electronic or otherwise. Just dark, gray and not as inviting as Best Buy and sure as heck doesn't hold a candle to an Apple Store. My home away from home!

[JeffDM]

Apple is reportedly considering a move that would pull ASCs from CompUSA boutiques -- a deteriorating model

Which party is at fault for the deterioration? In my area, the Apple Store set up shop in an oldish mall within two miles of a CompUSA when there was another, newer mall in an area with more money twenty minutes away. The CompUSA store in question had a very good record of selling Apple gear. Apple has had a history of poaching the markets of the resellers that have supported them in the past, so I wouldn't be surprised if this was happening elsewhere.

[ChevalierMalFet]

I've seen a bit of the inner workings of both Circuit City and CompUSA; Watashi your experience is pretty much policy at both places. Not only that, but it used to be that one could make a decent living selling computers at either place, and now since the commission structure has been replaced with hourly wages, that's really not true anymore. They really are the used car dealerships of computer sales, and I think in the end it will do both of them in.

Circuit City is in a slightly better position in that they have a stronger history selling the higher margin home entertainment/ car audio type gear, but as a downside their stores don't tend to carry higher end/quality items in the computer/digital accessory range (which is bad indeed considering how bad CompUSA is at carrying "hot items").

And while Apple does push their plans just as the retail stores do, I can tell you from experience that the box store plans tend to offer a lot less value for a lot more cash. Not to mention that the service you get tends to depend on the whim of the manager that day, and their infrastructure is a lot less organized. A possible exception is accidental damage replacement, but even then the value depends heavily on how careful you are with your equipment.

It's funny; in an economic environment where the "brand experience" and customer service are a central focus for differentiation, the CompUSAs and Circuit Cities of the world are doing everything they can to eradicate both from their stores.

[ChevalierMalFet]

Jeff, it's been my experience that in general, the Apple Store within a Stores are good because of the ASCs and despite the CompUSA management; I'm sure that's not true everywhere, but it seems to be a trend. In the stores I've seen without ASCs, they've been pretty abysmal. CompUSA seems to have been steadily scaling back Apple shelf space and square footage as well; and the proximity thing seems to be typical of resellers as well as Apple stores. I know of one CompUSA that has a third party Apple specialist right across the street from them.

[auxio]

Originally Posted by scotty321

Hell, I heard Best Buy salespeople telling people to buy some crappy MP3 player that was supposedly "better" than the iPod. Why? Because they got commission to sell that MP3 player.

Amen to that. If you don't think that the size of the cut is the raison d'etre for all commissioned salespeople, I've got a story for you...

Just today I was trying to buy an add-on component for a wireless audio system at a local big-box technology retailer. I clearly explained that I already had the main system and just needed a single component for it. However, once the salesperson saw the cost of the main system, he was trying to convince me to return my existing system and buy it again from him. Saying that was the only way I could get the add-on component. Ridiculous.

Don't believe for a second that any commissioned salesperson is going to recommend a Mac without some monetary incentive to do so.

[ChevalierMalFet]

Have the spiffs returned for PCs? I'm a few years out of contact but to my knowledge the only consistent monetary benefit to the comissionee was if the service plan payed out better than AppleCare, spiff wise.

[preston2o3]

Who wants to go to Circuit City to buy a Mac, not i. If anything i would go to CompUSA first, but other than that i would go straight to the Mac store, and if you are a new customer wouldn't you want to got the the Apple store? Circuit City sucks! They will not do well, unless of course you can't get them online and all the other stores are out. Tell it like it is.

[preston2o3]

Originally Posted by auxio

Amen to that. If you don't think that the size of the cut is the raison d'etre for all commissioned salespeople, I've got a story for you...

Just today I was trying to buy an add-on component for a wireless audio system at a local big-box technology retailer. I clearly explained that I already had the main system and just needed a single component for it. However, once the salesperson saw the cost of the main system, he was trying to convince me to return my existing system and buy it again from him. Saying that was the only way I could get the add-on component. Ridiculous.

Don't believe for a second that any commissioned salesperson is going to recommend a Mac without some monetary incentive to do so.

Best But does not get commission. They haven't for a very long time.

[ChevalierMalFet]

Ironically the closest CompUSA to where I am now is about a 2 hour drive; Circuit City is just down the street. Since neither is all that great in my book, having just the one nearby is fine. We also have a third of a Best Buy hah.

[backtomac]

If the store within a store model doesn't work at CompUSA, why will it work at Circuit City?

[STecchino]

dupe post

[lsngctrl]

BestBuy is a dump! They have allowed the stores to deteriorate and the customer service is gone. The last several times I went to a BestBuy the line was a mile long, yet they only had one or two registers open. Most importantly... the salesperson never seems to know anything about the products.

P.S. I have had the same experience at Circuit City.

[STecchino]

Originally Posted by backtomac

If the store within a store model doesn't work at CompUSA, why will it work at Circuit City?

I think the primary goal of expanding through Best Buy and Circuit City is to simply get more Macs on more shelves in front of more people.

Plain and simple, it will add more dollars to Apple's income statement. The incremental gains (sales) will outweigh any potential incremental losses (poor representation and FUD by in-store, non-Apple reps).

Think about it, Apple will not sells any LESS Macs by having them in the top 2 brick-and-mortar electronic re-sellers in the country. In some ways it also further legitimizes Apple as a computer brand just by being on the shelves in front of 99% of consumers.

[watashi]

Originally Posted by STecchino

Think about it, Apple will not sells any LESS Macs by having them in the top 2 brick-and-mortar electronic re-sellers in the country. In some ways it also further legitimizes Apple as a computer brand just by being on the shelves in front of 99% of consumers.

This is not exactly correct. The sales people will direct those potential Switchers away from the Mac because they don't understand or appreciate the product.

And if they do sell a Mac, they might pitch the CC service plan over AppleCare -- both situations are a loss for Apple.

Nevermind the negative association customers will have with CC and Apple products.

[backtomac]

Agree with Watashi, if shelf space is the only factor, sell them at Wal-Mart. At least there they won't have annoying sales people steering buyers to pcs.

[STecchino]

Originally Posted by backtomac

Agree with Watashi, if shelf space is the only factor, sell them at Wal-Mart. At least there they won't have annoying sales people steering buyers to pcs.

I'm sure there will be some negative effects. We're in agreement there. But I still predict that:

Originally Posted by Stecchino

The incremental gains (sales) will outweigh any potential incremental losses (poor representation and FUD by in-store, non-Apple reps).

[watashi]

You missed my point.

I agree they will sell a few products.

Schemes like interest-free financing and nearly-impossible to complete rebates will sucker someone -- unfortunately, I can say that as my mother just bought a PC from CC.

Even though she admits she got all her questions answered at BB because the kid there knew five times as much as the "gentleman" at CC -- the rebates CC was offering made it too good of an offer to pass up (fixed income and all). Sad thing is, I called her tonight and she was nearly in tears because the requirements for the rebates overlap, but go to different places, and she was frustrated trying to figure them all out. (I didn't want to add insult to injury by pointing out the fact that her rebates won't even cover the cost of the extended service plan she wasted her money on, and the lame printer she got for "free" with her new PC bundle takes ink cartridges that are only half the cost of normal cartidges, but only hold a third of the ink of normal cartidges).

ANYWAY, one way or another they will sell a handful of Macs -- that's a given. But they will only sell them grudginly and the experience will likely not be the same as if they had been able to visit an Apple Store, BB or CUSA.

I guess we're spoiled. We've got two decent Apple-authorized resellers within 10 minutes drive, one CUSA and four BBs within 20 minutes. Within 45 minutes we have four more CUSAs, about 10 BBs, two MicroCenters (the best of the class, IMO), and two Apple Stores. In the same area there are 10 CCs that all look run down or just out of business.

I'm sure Apple has a master plan and does see legit value and opportunity in having their products on the shelf at CC. But even though the gains may outweigh the losses, that could just mean .500001 to .499999. I think that energy and, in the case of really hot selling items, stagnant stock could be put to better use elsewhere.

[STecchino]

I guess we'll have to wait and see. Here's to hoping you're wrong and Apple trains the in-store reps and give them free Macs so they become on-fire Mac zealots and Apple sells millions of Macs at Circuit City and Best Buy! Hear hear!

[walshbj]

1. watashi is right - bb and cc make all their money on service plans. sad but true. Business Week did a big thing on it. Those places only exist because of the plans.
2. most bb employees don't really know anything about computers, just like the general public.
3. same for cc employees.
4. apple store employees aren't much different. anyone with plausible experience isn't going to be working retail.

Sure, some people at all the places might be an exception. And the apple store ones are likely to know more about Apple because it's all they're supposed to know. But surely they are putting out tons of pc misinformation. And sometimes they have to look up the most basic things I ask on the Apple web site. and they lie about things, like saying the mac laptops don't really run hot.

[FormerLurker]

the experience will likely not be the same as if they had been able to visit an Apple Store, BB or CUSA.

All they really have to do is make sure that the Mac buying experience at CC is no worse than the PC buying experience at CC. It's a pretty low bar to shoot for, so with a little bit of Cupertino training, they should be fine.

[BenRoethig]

It's good as interim measure, but Apple's future resides in the Apple store. Apple needs to spread out their stores a bit better.

[Haggar]

Originally Posted by STecchino

I guess we'll have to wait and see. Here's to hoping you're wrong and Apple trains the in-store reps and give them free Macs so they become on-fire Mac zealots and Apple sells millions of Macs at Circuit City and Best Buy! Hear hear!

Or those Circuit City and Best Buy guys could just wipe the Mac hard drives and run Windows only. I've already been to one CompUSA store where they had a Macbook Pro in the PC section running Windows only.

[Haggar]

Originally Posted by Ireland

I take it you must think Apple selling Mac's is not good thing? The customer could say: What's the difference with P.C. and Mac? The sales rep. could respond: Well P.C. tend to cost less, but Mac's don't get viruses, and are easier to use.

He did say "depending on which sales rep they get".

[melgross]

Originally Posted by BenRoethig

It's good as interim measure, but Apple's future resides in the Apple store. Apple needs to spread out their stores a bit better.

It's extremely expensive to open stores. Considering that retail is not Apple's business, the money allocated for that has to be carefully spent. While they are now one of the largest specialty retailers in the world, they have to be careful where they expand. One of the reasons why GTW's store failed was because they didn't place them. They put them in almost any empty storefront that they could find. Often in areas that were simply not in the market for these kinds of goods. Apple has learned from that carelessness.

They have been successful because they have been evaluating locations in markets where they believe that their products will be most happily received. I'm sure that as they continue to expand, and that as their brand becomes more universally accepted, they will be able to move into areas they don't think they will do well in now.

They now have 155 stores. That's a lot of retail presence. It has been said they they could expand to a maximum of between 300 to 400 stores before they run out of areas for their upper scale product lines.

I would rather see them be conservative in this, than see some of their stores fail. That would be devastating to their image, and thus, to their plans, and sales.

Right now, their retail arm is seen as being invincible. If it loses that luster, the entire company will be hurt.

So, I think that what they are doing with Best Buy, CompUsa, and Circuit City is exactly right.

If Apple's sales do well there, it will be attributed to Apple's strong brand, and if they do poorly, it will be attributed to the poor organization of the stores, and management.

This is, therefore, of little risk to either Apple's sales, or reputation. If the products don't sell well, no one can say that Apple is faltering, which is exactly what Apple's critics WILL say, if some poorly situated Apple stores fail.

One must look to the big picture, and not have some latent prejudice against some retailer cloud one's understanding of what Apple is trying to achieve by this.

I would rather give encouragement to this project, than to put it down without actually understanding where it might be going.

As I said earlier, Apple's brand, and product lines are now much better known, and understood by the public. It's much more likely that a consumer going into one of these stores who knows iPods, and that Apple also has computers, and software, will ask for an Apple product by name, and whose intention for going into the store in the first place is to buy an Apple product.

This is much different a situation that existed in past attempts to sell Apple products, where consumers didn't know about Apple, and its products.

The fact that these companies want to sell Apple's products again should be looked at as a good, hopeful sign that the name, and products are finally going mainstream.

[backtomac]

Melgross,

Agree with most of your points especially about the future being with Apple stores. I don't live very close to one myself, but whenever I visit a city that has one I generally stop by. The stores are unique and offer a special experience not offered in many other specialty retailers. The stores are stylish and well thought out. All of Apple's products are there for a test drive. I've personally found the staffs to be helpful, although I recognize that probably varies quite a bit from store to store.

Having said that I've serious misgivings about CC selling Apple computers. iPods are probably ok but often when I visit CC the service is poor and the sales 'advice' (I use this term loosly here) seems slanted. I worry that Apple will be poorly represented and this has been the history in the past. As I mentioned earlier, if ot didn't work out at CompUSA why will it work out here. The added exposure may help but that argument could have been made in the past as well and yet Apple felt it necessary to pull their products at CC. Count me as a skeptic on this one.