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[22 comments]

Does Google Need Stores?

February 19, 2013

Citing "an extremely reliable source," 9to5Google said last week that Google Inc. "hopes to have the first flagship Google Stores open for the holidays in major metropolitan areas."

The rumored move, news of which was picked up by several technology publications, would come as Google has branched into smartphones, tablets and laptop computers as well as software in recent years. Beyond supporting the brand's image, the stores would particularly enable Google to showcase its new products, Nexus tablets, Chromebooks, or even better position its Android-phone with partners.

Google already has set up Chrome mini-stores inside Best Buy in the U.S. and consumer electronic retailers in the U.K. Many reports pointed to Apple's advantage in being able to hype and let consumers try their products at their flagship stores. Microsoft also has recently been opening stores.

9to5Google's Seth Weintraub wrote that Google came up with the idea while planning Project Glass, Google's promised wearable glasses with built-in heads-up displays. Google X projects like driverless cars and mini-drone delivery systems would also benefit from being shown off at its stores.

Robert Hof, who covers advertising and the internet, believes the move makes sense.

"Many people simply aren't going to pop for a $200 phone or tablet, and especially a $500-and-up head-mounted display, without feeling it in their hands," he wrote on Forbes.com. "That's especially so when they know — or think they know, thanks to Apple's amazing marketing and product design — that they're buying what may not be the top-end products in the market."

Despite the rumor, a Google official in December indicated that the company had no plans to open a store and instead would focus in the area on providing offering tools to help retailers. Sameer Samat, Google Shopping's VP of product management, told All Things Digital, "We are trying to provide a level playing field for retailers."

Discussion Questions:

What would be the upside and downside for Google in opening its own stores? What particular challenges do they face? Does Google's retail opportunity extend well beyond a few flagships?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How would you compare Google's opportunity in retail compared to Apple?

Comments:

Google's opportunity at 'brick n mortar' retail is providing a customer touchpoint—literally and figuratively. Shoppers want to touch, feel, see, hear and smell the brand. All of these senses catalog the brand for the shopper.

To date, Google has been a virtual experience for most of consumers. A retail experience will allow Google to create a physical awareness of the brand. The Google experience would do well as a 'shop in shop' format, not unlike what Apple has done with Best Buy. Joint projects leveraging the portfolio of Google technologies with a diverse collection of retailers would be a great strategy for Google. DIY, Toys, Fashion could all be terrific candidates for designing and implementing an omnichannel 'omni touchpoint' shopping/brand experience.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

As Google continues to introduce more hardware, particularly with novel features (Nexus Tablets, Glass, Motorola/Nexus Phones, etc.), they'll need ways to introduce those products to mainstream consumers. And retail stores are still the the best way for consumers to discover new products. According to this Nielsen Global New Products study, 72% of new product discoveries still happen in retail stores.

Having a handful of stores in high traffic areas provide a lot of upsides. Think Samsung Experience Center in NYC Columbus Circle, World of Nintendo in Rockefeller Center, Bonobos Guideshops, Uniqlo, Etc.

Operating a few of your own stores usually makes you a better partner for national retailers. You suddenly are much better at designing proper point of purchase materials, supplying retail assets, etc.

The risk in operating your own stores is in creating too much channel conflict with your existing retail distribution partners. These days most retailers expect to see manufacturers selling direct, as long as those manufactures don't get too aggressive. The other risk is opening a few successful stores in highly desirable retail locations, and then getting too confident in your own retail prowess and start opening too many stores. As most discover, it's one thing to operate a success NYC flagship, and quite another to operate a nationwide chain.

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Jason Goldberg, VP Commerce Strategy, Razorfish

Think of Google opening stores as the mirror image of stores introducing private label. As the Convergence of Online, Mobile and Bricks (COMB) retailing proceeds, expect a lot more of this blurring. Again, the three components of retail: 1. meeting of the minds, seller and buyer; 2. delivering the goods or services; and 3. payment.

Delivering the goods leverages the store's function as a "neighborhood" warehouse, which is the functional description of most self-service stores, anyway. However, as noted, the warehouse has now, and will permanently have some advantages in helping close the sale—the meeting of minds. Electronic payment with the mobile wallet is a no-brainer that will happen regardless of the progress in meeting of the mind and delivery.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

The ability to put Google products in the hands of consumers in a Google designed atmosphere has strong upside, even if they only open a handful of stores in major metropolitan areas. Google has become so much more than search, and their efforts to revolutionize how information is delivered (Google Glass) and the automotive industry (Google cars) demand a different way to interact with consumers.

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Max Goldberg, President, Max Goldberg & Associates

Google does not have to open stores to get its products into the hands of the consumers as evidenced by its mini-stores in Best Buy. However, the name on that location remains Best Buy, meaning that Google does not have control (to the extent that any retailer has control over what happens in their locations). It also means if the purchase experience is great, then Best Buy gets the credit and vice versa.

The danger for Google is not in operating the store, but the fact that Apple has set the expectation bar very high. Should Google fail to provide the same level of shopping experience it runs the risk of the consumer's perception of the product being tainted by the shopping experience rather than the product itself.

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Steve Montgomery, President, b2b Solutions, LLC

It's very simple: every firm that wants to be ever-present in the consumer's mind needs to have a bricks-and-mortar presence. This should have happened years ago, but better late than never....

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Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

Thanks to mobile computing devices, online stores will have to embrace a physical presence just as much as physical stores have to embrace an online presence.

The upside of Google opening its own stores would be to better promote gWallet instead of relying on external vendors. Also provide interactive experiences instead of YouTube videos to promote their products better.

The downside would be dealing with all of the questions and inquisitions from the physical critical mass, as Google tends to be shy.

Ed Dunn, Founder, (Stealth Operation)

I agree with Peter Fader—better late than never.

Google must control the retail environment to provide a true brand-immersion experience. That immersion is critical to the future success of Google and its products and services.

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Liz Crawford, VP, Strategy & Insights, Match Drive

Ultimately, Google needs channels to the consumer. These may be via existing retailers or more directly to shoppers. If they aspire to offer a broad line of products, they need to have a multichannel presence.

This is particularly true for products where the senses are involved. The touch, feel, smell or even color of a product can not always be adequately conveyed through an online experience.

Of course, Google must be careful not to undermine their position as a trusted source of product information and a supplier of hi-tech, low-cost products.

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Raymond D. Jones, Managing Director, Dechert-Hampe & Co.

So the challenge here is how to create a compelling store experience that doesn't look like a "me too" of Apple. It will be fascinating to see which customer engagement technologies they choose and the approaches they'll take to marry online and in-store.

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Cathy Hotka, Principal, Cathy Hotka & Associates

Being in front of consumers is always a good idea. People are going to come into stores asking about their Gmail accounts and walk out with a phone or tablet. If the rollout is minimal, the worry of carrying too many brick and mortar stores can be postponed. I'm sure they've created an algorithm to determine just how many stores to open, in which markets, down to the number of visits expected to be received per hour. After all, this is Google.

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Zel Bianco, President, founder and CEO, Interactive Edge

Maybe this is just me but...Google is not a 'brand' to me yet. They have their fingers in so many things, but when I think Google, I think search. With that said, I think the downside to Google opening stores is getting the brand right. I honestly think they could blow it if they don't. They also risk being compared to Apple and have to get that right too. I like the concept of a few flagship stores in major locations. (Hey, isn't it time ATL gets to be one of those?) I'm thinking something along the lines of 'McCormicks World of Flavor' store. Super cool concept where the consumer is introduced to the brand and immersed in it. But again, it's all about the brand, IMHO.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

Google has a tremendous opportunity in opening physical stores to complement their online presence as they continue to grow in relevance and value to consumers around the world who might purchase Google products. Approached the right way, really the Google way, the stores could provide a number of benefits, including:

  • A "succeed quickly" or "fail fast" environment to test consumer response to products and services
  • A platform to define their unique value proposition as they continue to compete with Apple, Microsoft, Amazon, Facebook and others
  • A physical means to better understand and execute their partnerships with other retailers,
  • Enhanced marketing & messaging opportunities.

It will be interesting to see how Google approaches physical retail. If history is a good predicter of the future, their competitors better be on their toes.

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Verlin Youd, Principal, VPY LLC

I think it's a flagship/brand showcase opportunity. If well executed, a retail presence could accelerate at least two key strategies for Google. First, is the adoption and mainstream use of Chromebooks, which are already gaining traction in certain verticals like education. Second, is establishing Motorola as the premier brand for Android handsets, a position currently enjoyed by Samsung.

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Martin Mehalchin, Partner, Lenati, LLC

"Does Google's retail opportunity extend well beyond a few flagships?"

That's the question that I have. Sure Apple did it, but they started with things people "feel...in their hands." And when you're a religion, you build churches too...I don't know that Google has any of these attributes.

'notcom'

The upside would be more control over their own destiny. When you depend on others to sell your products much can go wrong. Google has experienced some problems licensing their Android system to anyone who could solder a few circuit boards together. This has resulted in several less than stellar smartphones and tablets. Just look on the web; you can't give some of these products away.

Google needs their own stores to protect their products. The greatest challenge they face is the backlog of products with the Android operating system that are junk. I don't know how much Google's retail opportunity extends, but we live in a world where paradigms change weekly—so who knows!

Ed Dennis, Sales, Dennis Enterprises

Apple makes you feel comfortable making a platform change—Google needs to do the same.

Google has built a platform, but they haven't really explained it that well and that's cool since their challenge is to explain the intangible 'cloud'. The stores will give them that chance.

So far, it has been up to us to figure out how to use Google's applications. It's not so bad. To cross the chasm, however, they will need to make people feel comfortable investing time learning and adapting to a new life process. Apple stores are all about that. In an Apple store, you see regular people learning how to do things with iTunes, iPhoto, etc. It's a place where you can imagine yourself doing more with hardware.

Google's opportunity in the stores will be to tell the story of how regular people have adapted to their cloud applications—no doubt there are many great examples of how folks are using Google Collaboration, Hangouts, Calendar, Gmail, Maps, +, Drive, etc in everyday work, life and play.

As for brand, how about this: Apple is about I, Google is about +. The genius Google hopes to tap is collective. That seems kind of now.

I think this year is Google's breakout opportunity—with stores and the upcoming Vince Vaughn, Owen Wilson film, I predict we hear the term API in a rap song.

Vahe Katros, Consultant, Plan B

This would be poor positioning by Google. Google needs to focus on supplying and improving its technologies, NOT competing with its retail partners. Google's focus should be contained, confirmed and in symbiosis with their retailers, not as becoming an independent retailer of their own, even if they are doing this on a limited basis. Instead, they should provide better tools and support for their retail partners.

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Kai Clarke, President, Kowa Optimed, Inc.

I agree that a very small number of high-profile stores in metro markets can be brand enhancing and provide marketing muscle. However, this can only be effective if Google is prepared with an innovative, clear brand message that these stores will bring to life. Assuming that to be the case, this can and will be an exciting step in the Google journey.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

Opening stores is not about actual sales. It is about giving customers more ways to be sold and supported. As Google gets more and more products, it is important to provide customers with more ways to interact.

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Joe Nassour, Chief Technology Officer, RetailTactics

For Apple, the user is the customer; the customer is the customer. For Google, the user is the product; the customer is the advertiser. For Microsoft the user is the enterprise; the customer is the IT professional. Who do you think has the best chance of retail success? Who has the highest revenue per square foot of retail?

I don't see Apple's retail dominance being threatened by either of these companies at a retail level. But Google, shifting people from products to customers, has the biggest hurdle to overcome.

michael bigley, Director of Creative Technology, RGI Inc

They key here is for Google to increase its physical brand awareness among consumers, sort of like Amazon's ambitions to open physical stores to familiarize consumers with Kindle devices and the Amazon content ecosystem. By opening flagship stores, Google's intent is not simply to sell devices, but to put its array of apps and services (e.g. Google Play, Google Voice, Google Maps, etc.) on display and allow people to try them on Android devices, in person.

The beauty of the Android open-source platform is that Google just needs to show consumers what's possible upon it—OEMs, carriers and retailers are already doing what they can to sell the hardware for it.

Christopher Krywulak, President and CEO, iQmetrix

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