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TheStreet Open House

Apple and Retail Disease

Stocks in this article: AAPLWMTBBYAMZNTGTRSHMSFT

NEW YORK ( TheStreet) -- Retail is in trouble. The industry has been on the endangered species list since Amazon (AMZN) was born and told consumers it was time to start thinking outside the box.

Except consumers took it a step further and stopped visiting the box altogether -- the "big box" stores, that is. As a result, once-prominent retailers have fallen by the wayside such as CompUSA, Circuit City, Media Play and many others on a list much too long to detail here.

What we have left are survivors Wal-Mart (WMT), Target (TGT) and to a lesser extent Best Buy (BBY), which is pretty much on life support at the moment.

But who wants to invest in a business or industry that is merely "surviving?" On Wall Street, what wins are bets made on "thriving" companies.

You would be hard pressed to find a company today that is thriving more than technology giant Apple (AAPL).

But here's the thing: Apple, which runs the popular Apple Stores seen in local shopping malls and other locations, has not been immune from the retail disease that has plagued the Best Buys and Radio Shacks (RSH) of the world. Is it time for concern?

In a recent article by TheStreet author Rocco Pendola, he reminded investors why retail was on the brink of collapse. In the piece, Rocco states:

"Radio Shack, Best Buy, even Wal-Mart and Target -- soulless brick and mortar retailers need to stop dipping into the same dead and tired retail toolkits and do something different. Maybe even crazy. Don't let Walmart and Target's relative outperformance fool you. They're as vulnerable as anybody else in the broad space."

After reading Rocco's article, I started to look at my own investment in Apple and wondered if its retail business had become "soulless," particularly in light of its recent admission that the change to its staffing formula was a mistake.

The company said that it would revert back to its previous policy and not allow stores to operate understaffed. Apple was looking for a way to save cost and increase its margins. But it backfired into a public relations issue that it would have rather avoided.

It was not so much the attempt at boosting revenue and increasing margins, but how it was executed -- employees had their working hours reduced with no idea of when that would be reversed. This was the same sort of decision that impacted upon morale at the big boxes, making them "soulless" as Rocco described.

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