Apple presence forces Glasgow reseller to close its doors

Posted:
in General Discussion edited January 2014
Repeating a trend seen elsewhere in the world, Apple's Glasgow, Scotland retail store has been siphoning enough customers away from local reseller Scotsys to force the third-party shop to close its store in the city.



Ever since opening in late August of last year, the conspicuously-marked official Apple outlet has effectively squeezed Scotsys' Glasgow store out of its mainstream market, making it unprofitable for the latter to compete with the Mac maker outside of specialty fields such as education, government, and small business.



"The closure of our Glasgow store is a simple recognition of the fact that, since Apple opened its outlet on Buchanan Street, there has been very little room at the high-volume consumer end of the market," says managing director John McAleenan, who heads Scotsys' parent company Adventi.



Despite the setback, Scotsys will continue to operate offices out of Bellshill and Edinburgh and says that retail was not key to its success. The firm points out that it has just secured a regional government order for 1,000 Macs and that it continues to work with the government to encourage orders from local businesses, rather than large multinationals such as Apple.



The shuttering of the reseller's Glasgow presence represents the latest chapter in what is often seen as a tug of war between Apple and the third-party stores it needs to extend its sales network. While Best Buy plans an expansion of the number of its stores with official Apple sections, Mac-focused stores have sometimes found themselves under increased pressure once Apple either sets up a nearby store or achieves a breakthrough in direct sales for the region.



Apple's online store is believed to have forced multiple Canadian stores to close even before first-party stores appeared, as resellers were often unable to supply customers with new systems as quickly as direct orders. Some of these retailers have in the past accused Apple of making small and medium-sized resellers a distant second priority to its own shops and very large retailers like Best Buy, shipping most iPods and Macs to its preferred outlets in advance of others.



The issue first came to wider public attention in 2003, when MACadam's Tom Santos and the owners of two other since-closed Apple resellers filed a lawsuit against Apple, charging the company with taking illegal steps to drive customers to its official stores at the expense of local businesses. At the time, the plaintiffs argued that Apple was pursuing a systematic plan of shutting down third-party stores by delaying shipments of new products, badmouthing resellers, and of raising the costs for both new Macs and repairs.



To date, Apple has denied the claims. Beginning as early as 2004, the Cupertino, Calif.-based company has also reportedly instituted reseller-neutral policies for sales staff to prevent them from disparaging third-party shops and products in an attempt to steer more business towards Apple.
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Comments

  • Reply 1 of 41
    Good riddance to bad rubbish. All I ever heard was negative things about Scotsys.
  • Reply 2 of 41
    auguraugur Posts: 34member
    Apple has never respected resellers or developers, or customers for that matter. Apple is a proud and haughty company, which is a direct reflection of Steve Jobs. The Apple Stores are all staffed by clones of Steve Jobs. For a company with an anti-Big Brother persona, they enforce intellectual conformity in a way that Mao could only dream about.



    Yes, they make a great computer, but their business and personal ethics are the inverse. Had they supported their dealers properly initially there would be no need for Apple Stores at all. Apple will eventually lose all these stores they are opening. Just as the smaller stores could not maintain their overhead, neither will Apple be able to. A few unexpected bumps is all it will take. At this point their strategy is to compete with themselves. They are saturating the box retailers at the same time that they open stores. It's nuts. It would have made more sense to create a franchise system with the Apple resellers, but they never gave them enough margin to survive. You don't assemble a huge hoard of cash by treating people fairly, you assemble it by treating people unfairly.
  • Reply 3 of 41
    Scotsys can't even compete. Here at one of Scotland's largest universities, we simply don't buy much in the way of computers from them, given that Apple's educational discount saves us some 10% (and there's the usual Higher Education service contracts in place). And that, even though Scotsys's retail store is literally two minutes from my office. All I'd buy there is the occasional power supply, or a laptop bag.



    That said, I can't say I've heard bad things about Scotsys. They're friendly and competent, and usually have the latest hardware in the shop. But I can see why they won't be able to compete once Apple is going to open its Princes Street presence (if that is to happen).
  • Reply 4 of 41
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by AppleInsider View Post


    At the time, the plaintiffs argued that Apple was pursuing a systematic plan of shutting down third-party stores by delaying shipments of new products, badmouthing resellers, and of raising the costs for both new Macs and repairs.



    How exactly doing Apple selling more expensive computers hurt other retailers?
  • Reply 5 of 41
    When I was in the Apple reseller channel they treated us fine. Most of the money was in services outside of the store. Most reseller who count on Retail tend to struggle anyway. They can't stock as many iPods as a Target or Walmart and people are comfortable enough with on-line ordering that they will buy from who ever is the cheapest or has some rebate or bundle.
  • Reply 6 of 41
    Short story: Apple resellers, when they signed on with Apple, were NEVER promised perfect support, or exclusive non-compete agreements, or that Apple would never change their price, plans, strategy, scope, or offerings.



    I'm sorry, but nostalgia aside this is just business. It's not "big bad bully" beating up "helpless little girl". When you sign on as an Apple reseller you know what you're getting into: you're going to get support and service from a company KNOWN to have less-than-wonderful service and support for it's resellers. You KNOW that. If you want a company that has a "perfect" reseller relationship then get into some other business. No one forced them to choose to sell Apple products -- they did that on their own. And they did it because there was a profit in it.



    But business is not static. Things change. If Apple decides to charge them 10 times what they do now, then so be it. Both parties will live with the results, good or bad. If you don't like it, find a new business. Business is fluid... it changes every day (both good and bad), and as a business owner you have to change with it -- sometimes performing a 180° turn. It's just business. Don't like it? Then stop selling Apple products. Sell something else. Create your own product. Or maybe find a better way to package, market, or bundle services in with the deal.



    In short... Apple doesn't promise success, non-compete, perfect service, perfect prices, and a non-changing relationship. No business on this earth does all that. The press just likes to point out situations like this so that they can use our emotions and nostalgia to make it appear like a "big bully" situation. It's not. It just simply is not. It's business and everyone does it in some form or the other. You think Scotsys didn't try to squeeze every last penny from its customers at every possible turn? You bet they did. You think Scotsys was there to support customers who had problems at the drop of a hat? I doubt it.



    No one is blameless in this game -- so we need to not let the press control our emotions and nostalgia in situations like this. This is not a "personal" situation, as the press would like us to believe (as that makes for much better news). It's just business.
  • Reply 7 of 41
    auguraugur Posts: 34member
    Quote:
    Originally Posted by ifiredmyboss.com View Post


    they will buy from who ever is the cheapest or has some rebate or bundle.



    That is another whole separate problem. Why do government's allow the same goods to be sold at different prices? But don't kid yourself, the manufacturer plays favorites. No matter what the independent store does, the factory store will get favors. HUGE FAVORS. In marketing alone there is a huge disadvantage, but as the other poster noted, the education discount is offered direct only, not through the retail channel.
  • Reply 8 of 41
    gustavgustav Posts: 825member
    Wow, people just don't get it. In the days of online shopping and big box stores, the smaller retailers have to smarten up. Does anyone honestly think this is just a problem with Apple? Every product from cell phones to cameras to other PCs, or even non-tech products can be bought cheaper online or at big box stores.



    Here's a subtle note to Apple retailers: YOU CAN NOT HAVE A VIABLE BUSINESS IF ALL YOU WANT TO DO IS SELL MACS. You need to provide value-added service, not just retail. Even if you have friendly and knowledgeable sales people, there's nothing stopping people from talking to you and then going home and buying from Apple online. You need to offer courses, installation, consulting, etc. - something that will make your customers pay for something they can't get cheaper elsewhere.



    The above retailer seems to be surviving - just not their retail operation, so it seems like they're getting the message. But other retailers have not (like the article about the 3 Canadian retailers referenced in the article)
  • Reply 9 of 41
    Given my past experiences with Scotsys, it's no surprise they have shut. Despite being the mac 'specialist' in Glasgow & Edinburgh, they were expensive, had very little stock of anything, couldn't answer anything about a mac if it wasn't printed on the box somewhere and gave the general impression that they just couldn't be arsed with the general public. I don't know anybody that liked the shop or will be sorry to see them go.



    I can't speak for their institutional sales side but I can only hope their service is better.
  • Reply 10 of 41
    It's been my misfortune to have to deal with Scotsys (for support) on a number of occasions in Edinburgh. The experience has always been bad.



    Apple have obviously shown the good people of Glasgow how Apple products should be sold and supported. Hurray for competition!
  • Reply 11 of 41
    Quote:
    Originally Posted by augur View Post


    Apple has never respected resellers or developers, or customers for that matter. Apple is a proud and haughty company, which is a direct reflection of Steve Jobs. The Apple Stores are all staffed by clones of Steve Jobs. For a company with an anti-Big Brother persona, they enforce intellectual conformity in a way that Mao could only dream about.



    Yes, they make a great computer, but their business and personal ethics are the inverse. Had they supported their dealers properly initially there would be no need for Apple Stores at all. Apple will eventually lose all these stores they are opening. Just as the smaller stores could not maintain their overhead, neither will Apple be able to. A few unexpected bumps is all it will take. At this point their strategy is to compete with themselves. They are saturating the box retailers at the same time that they open stores. It's nuts. It would have made more sense to create a franchise system with the Apple resellers, but they never gave them enough margin to survive. You don't assemble a huge hoard of cash by treating people fairly, you assemble it by treating people unfairly.



    Quote:
    Originally Posted by augur View Post


    That is another whole separate problem. Why do government's allow the same goods to be sold at different prices? But don't kid yourself, the manufacturer plays favorites. No matter what the independent store does, the factory store will get favors. HUGE FAVORS. In marketing alone there is a huge disadvantage, but as the other poster noted, the education discount is offered direct only, not through the retail channel.



    Don't hold back - tell us what you really think
  • Reply 12 of 41
    jragostajragosta Posts: 10,473member
    I think you got the title of the article wrong. How about "Scottish retailer refuses to offer competitive service and goes under"?



    It was their choice to fail to keep up with the modern world.
  • Reply 13 of 41
    Quote:
    Originally Posted by segovius View Post


    The guys in Scotsys in Edinburgh were pretty cool, friendly and helpful but the business seemed to lack ambition. I think that is the problem - they stayed small.



    They had a golden opportunity handed to them on a plate for years to sell the coolest stuff - in fact they had the Apple market potentially sewn up in Edinburgh until John Lewis ran with the ball instead.



    If you are selling the coolest tech products in the world in a University town whose students have probably the one of the highest disposable incomes of any in Europe then, well......



    Absolutely.



    Scotsys Edinburgh is a stagnant little store, with a single model of each of Apple's range if you're lucky ? always a couple of months out of date mind ? whose notion of "value added" is to hike up their 3rd party kit prices whenever they remember to be bothered.



    Ugh.



    Apple's UK webstore alone was enough to keep me away from them. Here's to hoping that Glasgow's proximity on Cupertino's (007 arch nemesis fortified compound style) world map doesn't put them off the Princes Street option for much longer. I heard "from a reputable source" that Glasgow and Edinburgh were meant to be happening at the same time. Dang!
  • Reply 14 of 41
    It is pretty crappy that Apple does these things to resellers but its true that every big company does this in one way or another. Wal Mart shuts down plenty of businesses because who can afford to start up a store that offers everything from groceries to auto parts to guns to clothes at very competitive prices? The fact is when a company becomes big enough they can provide things that start up or smaller companies simply cant. They are almost too good at what they do and others can't compete. A free market will work itself out though in the end.
  • Reply 15 of 41
    citycity Posts: 522member
    These resellers provided repair services and used products that Apple doesn't. The resellers are now gone in my area. When I took my dead (power supply) 39 month old display for a repair to the Apple store, they told me it is "vintage" and they don't fix vintage products.
  • Reply 16 of 41
    Quote:
    Originally Posted by tuneman07 View Post


    A free market will work itself out though in the end.



    The invisible hand of stupidism rears its ugly head again. It's invisible because it doesn't exist.



    There is no such thing as a "free market" if you accept the "scientific" concept of cause and effect. Things happen for a reason. People make a conscious choice to screw other people.



    "In the end," we'll all be dead. :-) Yet another cause and effect.
  • Reply 17 of 41
    gqbgqb Posts: 1,934member
    Quote:
    Originally Posted by solipsism View Post


    How exactly doing Apple selling more expensive computers hurt other retailers?



    I'd think that means raising those costs for the retailers.
  • Reply 18 of 41
    Quote:
    Originally Posted by augur View Post


    The invisible hand of stupidism rears its ugly head again. It's invisible because it doesn't exist.



    There is no such thing as a "free market" if you accept the "scientific" concept of cause and effect. Things happen for a reason. People make a conscious choice to screw other people.



    "In the end," we'll all be dead. :-) Yet another cause and effect.



    lol, there is no invisible hand but there is the word "stupidism"? So when Apple takes over the world with their practices and starts charging 10 thousand dollars for a crappy computer no one will answer back with a computer for 5 grand? When Wal Mart takes over the world of retail and starts charging 400 dollars for a loaf of bread no one is going to answer back with a 200 dollar loaf? Yea your right competition doesn't regulate prices at all.
  • Reply 19 of 41
    gqbgqb Posts: 1,934member
    For over 20 years, Apple tried every permutation of the retail partner route, and the result was a nice view over the precipice of bankruptcy. The Apple Stores, like 'em or hate 'em, are a major cog in Apple's newfound success. It's called taking back control.

    I used to like the little Mac shops (and little PC shops for that matter), but no longer see the big value-add for them.
  • Reply 20 of 41
    Quote:
    Originally Posted by city View Post


    These resellers provided repair services and used products that Apple doesn't. The resellers are now gone in my area. When I took my dead (power supply) 39 month old display for a repair to the Apple store, they told me it is "vintage" and they don't fix vintage products.



    Resellers sometimes offer services that Apple doesn't, but they can't repair a product if Apple won't provide the necessary parts. Once Apple decides something is "vintage" or "obsolete" the chance of finding anything other than used parts is next to nothing.



    BTW Apple sets ridiculously high prices for all its parts and specifies tight, sometimes impossible to achieve, times for repair. For example a service provider who replaces a drive in a notebook is paid for one unit of labor. If I remember correctly that's just 20 minutes. In the case of the 12" PowerBook it's impossible to replace a drive in under 45 minutes.



    Selling used product is one good area to differentiate from Apple stores. You can usually make good margins, but occasionally a unit will fail in warranty (stores usually have to offer a 30 day guarantee on used stuff) and blow the profit of several units. Another area where a re-seller can shine is by offering rentals. This can work when you have sufficient demand from corporate clients who can afford to cover a significant portion of the unit's cost every week. It's completely uneconomical for a retailer to rent machines at consumer rates.



    It's hard to make much money as an Apple reseller. Profit margins on high end hardware is under 10% and can drop below 5% on consumer models. I recall selling $1100 eMacs for just $40 above cost. It's almost not worth the time it takes to answer a few questions and do the paperwork. You can't mark up your RAM 25-40% anymore because even though Apple has sky high RAM prices, your customer can simply walk across the street to the local PC shop where all RAM is only 10% over cost. Offering a good selection of Mac specific notebook bags is one of the few ways to beat the big box stores, but there's better selection online. I don't recommend anyone get into the reseller game. It's a good way to lose all your hair trying to stay above break even.
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