Analyst Angle: An analyst’s travelogue down New York’s Fifth Avenue

Editor’s Note: Welcome to our Monday feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Compete’s Miro Kazakoff, Jupiter Research’s Julie Ask and iGR’s Iain Gillott.
After a press conference in New York City’s Central Park last week, I discovered myself at the top of Fifth Avenue, where every store is a “flagship” store (if only to justify the outrageous cost of renting the space). I was eager to see the new Carphone Warehouse/Best Buy joint ventures popping up in Manhattan, and I hit up several other stores along the way. Join me for an analyst’s travelogue down Fifth Avenue:
Apple Store (the Cube; 767 Fifth Ave.)
I had been here just before it opened to the public and I forgot just how big a space it is. At 11 a.m. it was positively jumping, packed with people. All the Macs on display were set with iPhone screen savers and an HTML link to capture your e-mail address, but I didn’t get a chance to fill that out because most of the Macs were occupied with customers and people taking advantage of free PC/Web access. And there are a LOT of Macs at this store. Many companies are moving toward an experiential (“we’ll show you how this stuff works”) model of retail, but they’ve got nothing on Apple. Apple now has a program where you can sign up for a year’s worth of weekly 1:1 training sessions on the Mac/iPod/digital media topic of your choice. For $100. A year. There is no way that’s cost effective as a service, but as a brand-building/educational tool, it’s rather amazing.
Nokia Flagship Store (5 E 57th Street)
I had been here just before it opened to the public, and I forgot just how narrow a space it is. Employees pointed to the unlocked N95 as their top selling phone (which is not surprising, as no carrier offers Nokia’s super-phone directly). The N95 was recently moved to the second floor where customers can spend time learning how to use it from a fairly knowledgeable sales associate sitting among a row of accessories that can be used to demonstrate printing, music solutions, etc. There were a few customers milling about on the first floor, mostly from overseas; the salespeople say the place gets crazy busy on weekends. Given the size of the store, that wouldn’t take too many customers. The third floor is an exclusive Vertu boutique.
Disney Flagship Store (653 Fifth Ave.)
OK, so this didn’t have anything to do with mobile devices, but it was on the way to the Best Buy Mobile locations. Even Apple could learn a thing or two about experiential retail from this store, which has live characters (people in full Disney costume) in a special third floor lounge available for your kids for a photo opportunity-just like at the theme parks. I haven’t quite figured out yet how to translate this to phone retailing, but it was extremely impressive, and everyone coming out of the meet-and-greet left the store with merchandise.
Sprint Nextel Store (595 Fifth Avenue)
This store was disorganized and dowdy, despite the rent this location must command. Only a single customer was in the store just after noon. The top-selling phones are the UpStage-they couldn’t keep them in stock-Treos, BlackBerries, and more BlackBerries. Like nearly every Sprint Nextel store I’ve visited in the past year, the sales staff appeared to be having a tough time selling both Sprint and Nextel brands; cross-brand knowledge level was low.
Cingular Store 5th Avenue (575 Fifth Ave.)
This was a relatively small store but the corner layout took maximum advantage of the space. There were a handful of customers around noon. Employees report that their top selling phones are BlackBerries, BlackBerries, Treos, and BlackBerries. (Do you get the sense that there are a lot of business buyers in midtown Manhattan?) Unlike the reps in Cingular mall locations I’ve visited recently, the employees here were moderately knowledgeable and didn’t shy away from smartphone questions, which makes sense, since that’s all they claim sells here.
Best Buy Mobile at Best Buy (529 Fifth Avenue)
If the Sprint store was bad, this was a disgrace. It is supposed to be a “store within a store,” but it was just a mess: a few counters with confusing signage and poor staffing. An entire wall looked like it might-might-be under construction, or perhaps it was just in disarray. There were a fair number of customers close to 1 p.m., and they all looked disoriented. Some bought accessories, the rest left.
Best Buy Mobile (Stand-alone store around the corner at 360 Madison Ave.)
Ah. Now this was more like it. This is a reasonably large store laid out by carrier and then broken out by prepaid or postpaid. Prepaid brands likely to be shopped against each other-Boost, Virgin and Amp’d-are all up against one wall. Contrary to popular belief (and wishful thinking by Nokia and Sony Ericsson), Best Buy Mobile is largely focused on subsidized handsets. There was one pod with unlocked phones that included the Nokia N73, Sony Ericsson K790i and the Samsung D900 (Carbon), but two-year contracts are the only thing listed for the vast majority of the store.
The most striking difference between the Best Buy Mobile store and carrier stores or other cellphone retail aggregators was that the blueshirted employees are non-commissioned and reasonably well trained (it will be interesting to see if the company can maintain this level of knowledge as it expands). The selection doesn’t represent the whole market, but Best Buy Mobile definitely focuses on the handset first and service plan second in its sales pitch. Top selling phones: BlackBerry 8800’s, BlackBerry Pearls and other smartphones. The Carbon is the only unlocked phone they said sells well-people come in asking for it-and while the reps understood the value proposition for the N73, they couldn’t clearly articulate it other than pointing out that it has Carl Zeiss optics and can do e-mail, but noted that “it’s a smartphone, but not like the BlackBerry or 8525, which have QWERTY keyboards.” There was only a trickle of customers coming in at this point, but it was 2 p.m. and the lunch rush, along with my flagship retail tour, was over.
Some Conclusions
–In case anyone is wondering where RIM sold those million BlackBerries last quarter, they were apparently all bought in midtown Manhattan.
–Apple stores are laid out by subject area-Macs in one section, iPods in another. The Disney Store also groups categories together: all mainstream merchandise from each movie property (such as “Cars” or “Pirates of the Caribbean”) is found in one spot, and collectibles are segmented out on the third floor. Nokia follows this to an extent: the experience area is on the second floor, and Vertu gets its own boutique. But carrier retailers don’t follow this formula at all. In fact, carrier stores don’t appear to follow any formula at all, with all the merchandise placed at random.
–In other areas of merchandizing, “experience retail” is moving from flagship stores down to regular stores. For carriers, even stores sitting on flagship row are fairly pedestrian.
–Best Buy Mobile does offer a differentiated retail experience-at least in the stand-alone store I visited-but the most striking difference was the uniformly high educational level of the personnel working there. The jury is still out whether that experience can be replicated nationwide, and even those employees had trouble selling non-QWERTY smartphones.
Avi Greengart is the principal analyst for mobile devices at Current Analysis Inc. All opinions here are his own. You can contact him directly at [email protected]. You can contact RCR Wireless News at [email protected]. No retail employees were hurt during the production of this column.