Apple's New Retail Strategy? Mini-Me.
By Erick Schonfeld

(Business 2.0) – Steve Jobs might tell you that to get bigger, you first need to get smaller. He proved that with the iPod Mini. And soon Apple plans to unveil another think-small strategy: the mini-store.

With Apple stores booming in many major U.S. cities, the company is looking to further expand. So this fall, small boutique versions of its high-profile outlets—no grand staircase, no theater, limited display space—will start sprouting up in shopping malls. The strategy could be key to boosting Apple's PC market share, which between January and June nudged up for the first time in six years, from 2 to 2.2 percent, according to market-research firm IDC. "They're going after people who aren't looking for an Apple experience," says Piper Jaffray analyst Gene Munster.

Though Apple declined to comment, there are at least six mini-stores under construction, including locations in Santa Rosa, Calif., and Syracuse, N.Y., according to local news reports and construction documents. At 300 to 1,500 square feet, they cover a fraction of the area of the full-size stores, which run between 4,500 and 20,000 square feet. In markets with a proven appetite for Apple products, the minis are a less expensive way to saturate the territory. In second-tier markets, they're a low-risk way to test consumer interest in pricier offerings. Munster says they'll likely carry a full selection of products but will push impulse items such as iPods and Wi-Fi gadgets. In addition, every mini-store will feature a "genius bar" offering expert advice. Why? The company has found that 30 percent of genius bar visitors end up making a purchase the same day.

For the quarter that ended in June, Apple's stores accounted for 13 percent of total sales, up from 9 percent a year earlier. By year's end, the company plans to add 16 more stores to its current 84. But Apple also wants to sell more through other retailers. CompUSA, Fry's, and Micro Center already carry its products, and this fall it's testing a new store-within-a-store concept at a dozen of CompUSA's Good Guys electronics stores in California. If they take off, they'll pop up in the other 60 or so Good Guys stores in the West. Now that's a small idea with big implications. — ERICK SCHONFELD (ADDITIONAL REPORTING BY GARY ALLEN)