Visioning a New and Better Apple Retail Strategy

NEW YORK (TheStreet) -- If Tim Cook hired former Burberry CEO Angela Ahrendts to do nothing more than mind the current iteration of Apple's (AAPL) retail ship, I question Cook's motives as well as Ahrendts' decision to take the gig.

You don't bring a heavy hitter like Ahrendts in without big plans and an appetite for change.

ICYMI: Antoine Gara of TheStreet wrote Time to Think of Apple as a Global Luxury Brand late last week. His article goes a long way to explaining why Ahrendts now assumes a position Apple, for all intents and purposes, left open since Ron Johnson left:

I wonder whether it's time to evaluate Apple as one of the premier global luxury brands and find a set of comparable companies with similar margin and growth characteristics.
Maybe Apple's better comparables would be Burberry apparel, LVMH Moet Hennessey Luis Vuitton goods, Diageo (DEO) alcohols, Tesla Motors (TSLA) electric cars, Lululemon (LULU) yoga pants and Estee Lauder (EL) perfumes ...
Buyers of the products from (these) luxury brands are also more than likely to be Apple iPhone and iPad users, relative to Samsung or Microsoft.

Gara goes on to ask a solid question:

Why do we relentlessly seek ways to compare Apple with a narrow universe of tech sector giants?

Because that's what "we" know.

For better or worse (and I think worse), the financial media, including my employer, TheStreet, tends to rely on people -- like Wall Street analysts -- who speak a language that pretty much only allows for obvious comparisons. Guys like Antoine Gara are few and far between. Anybody can call Apple a "luxury brand," but to take it a step or three past the obvious and say, maybe we ought to stop comparing Apple to Microsoft (MSFT) and use companies such as Hermes requires a whole 'nother cognitive leap.

I trust Ahrendts -- and by virtue of hiring her, Cook -- realizes that if she's going to position Apple like the global luxury brand Gara describes, she needs to treat it like a luxury brand domestically.

This speaks to the drum I've been beating for roughly a year now: Apple needs to blow up its third-party retail relationships. That means get the heck out of every popsicle stand from Target (TGT) to Best Buy (BBY). And there's no time like the present to cut ties with the biggest dump of them all -- Wal-Mart (WMT).

If you're going to put Apple in the same league with the brands Gara mentions internationally and include them in the TSLA/LULU, not MSFT/Google (GOOG) category, it's past time to make what's happening on the ground reflect this now only half-realized reality.



Ahrendts, Cook and others at Apple have the key answers here.

Does Apple's core/most-important consumer have more of an affinity for Luis Vuitton, Tesla and Lululemon than it does for Best Buy, Target and Wal-Mart? I would be willing to bet my left hand that that's the case. But even if it's not absolutely 100% so, does it matter?

Apple self-inflicts damage to its image each day it stays in sterile big box stores, particularly the ones where society's lowlifes battle over Black Friday doorbuster deals. If Apple extracts itself from these soul-sucking and, in the worst cases, degenerate environments, it's not like it's going to loose anything. Do you really think the non-violent, sane and literate Best Buy, Target or Wal-Mart shopper -- and, to be fair, that most of us -- will buy an Android device simply because Apple's no longer available at their favorite discount retailer?

No need to answer that.

It's time for Apple to get creative with how it sells its products outside of its own online environments and retail stores.

Pull everything back. Start from something that resembles scratch.

Enough with the vending machines in Macy's (M). (Especially ones with lame, five-years-too-old iPod branding!!) And definitely put a stop to the practice of Best Buy, Target and Wal-Mart exercising so much control over price and placement of Apple products. Determine how to elegantly and logically integrate iPhones and iPads -- and whatever comes next -- in a handful or two of the highest of high-end (from price and/or perception standpoints) physical retailers.

That's not only an Apple retail strategy I can get behind, it's the most appropriate one if you have the long-term health and integrity of the iconic brand in mind.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist for TheStreet. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

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