Companies such as Sony, Dell and Philips, which are establishing chains of own-brand retail stores and kiosks, might be putting themselves at risk. According to Oyster Bay, N.Y.-based ABI Research, "OEM storefronts and kiosks represent a major change that will disrupt the current retail ecosystem."
"Bypassing their existing distributors and retailers could prove successful for some, but might present challenges for others," says research director Vamsi Sistla. In a report titled, "CE OEMs Launch Disruptive Retail Strategy: Their Own Storefronts," ABI points out that the benefits of storefronts such as better customer experience, brand protection and partner opportunities with other vendors might be outweighed by Wall Street's view of brick-and mortar stores. These companies will now be scrutinized as to the number of stores added or closed and how much revenue per customer stores generate.
These factors don't seem to have stopped Apple, which generates 20% of company revenue through its 125 stores worldwide. Dell has over 160 kiosks in malls and Sony is partnering with Zoom Systems to deploy vendor kiosks, targeting virtually all the leading malls in the U.S.
"Stores mean ongoing operational costs as well as infrastructure," Sistla notes. "Anybody can make money when times are good, but when economies contract, retailers are the first to be tested. Some will remain profitable, others may not. With this strategy, OEMs may be trying to 'boil the ocean.'"
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