Samsung is taking Apple Inc. (NASDAQ:AAPL) ever more seriously.
The South Korean tech giant is moving aggressively into the U.S. retail business. Samsung will open more than 1,000 mini-stores inside existing Best Buy Co., Inc. (NYSE:BBY) stores around the country. Called “Samsung Experience Shops,” the firm intends these efforts to directly compete with Apple Inc. (NASDAQ:AAPL)’s stores.
The idea is to allow customers to get their hands on Samsung’s gadgets in a store environment. The company believes that this will increase awareness of its products, and that those products are part of a unique brand with its own history of quality. Browsers will also be able to consult employees who are experts in personal technology and Samsung’s products.
By using Best Buy Co., Inc. (NYSE:BBY)’s stores to build its stores-within-a-store, Samsung is copying a traditional retail experience. But is the tech world so traditional? What works for clothing retailers may not work for electronics. Still, Samsung seems convinced. The amount of effort it’s putting into opening 900 shops by the end of May is staggering.
For Best Buy Co., Inc. (NYSE:BBY), this is an attempt to combat the “showroom” factor that it suffers from. People come into the place to get a hands-on feel for potential electronic purchases, then end up buying them cheaper through Amazon.com, Inc. (NASDAQ:AMZN). It’s a part of the retail experience that gives Amazon.com, Inc. (NASDAQ:AMZN) a real leg up. Consumers have turned one of Amazon’s weaknesses – the lack of ability to give a test-drive – into a disadvantage for Best Buy Co., Inc. (NYSE:BBY) and other electronics retailers. Best Buy Co., Inc. (NYSE:BBY) needs to turn that around quickly. Sharing space with Samsung is a step in the right direction.
A bit of exclusivity
Samsung’s motivation– in addition to added sales – is the belief that its brand is not yet well-enough known in the United States. By opening specialty shops inside a big box electronics retailer, the company starts the process of establishing itself as a premiere brand for consumers. Building a level of “cool factor” respect would go a long way towards knocking Apple Inc. (NASDAQ:AAPL) off its perch.
If making that case is successful, it could have a long-term impact on the market for U.S. personal electronics. Especially in the smartphone market. Google Inc (NASDAQ:GOOG)’s Android operating system is currently running more than 70% of the smartphones being sold. Inside that number, however, is the fact that almost 50% of Android users are using Samsung hardward. Google Inc (NASDAQ:GOOG) stands to gain as much against Apple Inc. (NASDAQ:AAPL) as Samsung, and will much lower risk.