Bloomberg News

Target to Test Apple Boutiques to Boost Lagging Tech Sales

January 12, 2012

(Updates shares in ninth paragraph.)

Jan. 12 (Bloomberg) -- Target Corp., the second-largest U.S. discount chain, plans to install areas dedicated to Apple Inc.’s brand in some of its stores this year to boost sales of iPads and computer accessories.

The concept will be tested in 25 locations and have a wider assortment of Apple products than the retailer currently sells, Dustee Tucker Jenkins, a spokeswoman for Minneapolis-based Target, told reporters today.

Target, which already sells Apple products and was one of the first major retailers to sell the iPad, said “softness” in electronics sales last month contributed to a same-store sales increase that trailed analysts’ estimates. By placing branded areas in Target, Apple is returning to the big-box retailers that late co-founder Steve Jobs had sought to circumvent when he created the company’s chain of stores a decade ago.

“Target is a retailer that I don’t think has a large presence in tech, but it has a good presence in young suburban family shoppers,” Daniel Ernst, an analyst at Hudson Square Research in New York, said in a telephone interview. “It’s the hip, big-box store. It makes a lot of sense and it will give Apple a bigger footprint.”

Apple’s stores typically are placed in high-trafficked areas or flagship locations such as Grand Central Station in New York and Covent Garden in London.

Apple already has miniature shops in more than 600 Best Buy Co. locations, a partnership that began about two years ago. The sections within Best Buy have characteristics of Apple stores, with tables highlighting products such as iPads and Mac computers.

‘Big Driver’

“The guys standing next to it are trained to sell Apple products and have different T-shirts on, and it’s been a big driver,” Ernst said.

Apple, based in Cupertino, California, has been operating without a head of its retail operations since Ronald Johnson said he would leave to become chief executive officer of J.C. Penney Co. in June. Apple had 357 stores at the end of last quarter, which generated $3.6 billion in sales.

Target rose 1.6 percent to $49.81 at the close in New York. Apple fell 0.3 percent to $421.39.

--With assistance from Ashley Lutz in New York. Editors: Kevin Orland, James Callan

To contact the reporters on this story: Matt Townsend in New York at mtownsend9@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net; Heather Perlberg in New York at hperlberg@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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