Google retail stores: wise strategic move, or mistake? Journalists have recently speculated that Google Inc (NASDAQ:GOOG) may begin opening standalone retail stores to sell its Nexus smartphones and tablets, Chromebook laptops, and perhaps demonstrate Google Glass.
Some analysts believe that such a move may benefit Google by speeding Android and Chrome adoption.
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
The following is some of evidence that Google may open retail stores:
Various Google job postings seek engineers to “Develop, test, and deploy Retail Point of Sale systems” (POS), requiring skills such as “Experience spanning any of the top tier platforms including: International Business Machines Corp. (NYSE:IBM), NCR Corporation (NYSE:NCR), Retalix Limited (NASDAQ:RTLX)”, various retail POS systems.
Google Inc (NASDAQ:GOOG) has previously opened pop-up stores in cities and airports, and maintains a store-within-a-store presence at some Best Buy locations in the U.S. and PC World locations in the U.K. In September 2011, Arvind Desikan, head of Google U.K. consumer marketing, commented that, “[The PC World collaboration] is our first foray into physical retail … It’s something Google is going to play with and see where it leads.” He also commented that Google believes that 80 percent of laptop sales are made in physical retail stores, according to the London Evening Standard.
Google retail stores may benefit the company in several ways:
(1) Allowing consumers to test devices before buying has clearly worked well for Apple Inc. (NASDAQ:AAPL), and may benefit Google’s Nexus line of competing devices too. Apple retail stores generate average annual revenue in excess of $50m, according to Tim Cook, Apple Inc. (NASDAQ:AAPL)’s CEO. Time Magazine has speculated that an Apple store costs around $10m to establish, although Morgan Stanley (NYSE:MS) analysts assume that Google would spend significantly less in the beginning.
(2) Retail stores may allow Google Inc (NASDAQ:GOOG) to demonstrate new technologies such as Google Glass or self-driving cars, boosting Google’s innovative reputation on “Main Street”.
(3) Google stores may give the company a public face, introduce support options, increase consumer trust, and thereby boost adoption of highly-personal web services such as Google+, Google Now, Google Wallet, and Google Drive, among others.