Apple Store may eat into resellers' profit

Knightsbridge shopping centre, where it is believed Apple will open its store.
Knightsbridge shopping centre, where it is believed Apple will open its store.ST PHOTO: DESMOND WEE

Analyst: But resellers won't lose out totally as they have more outlets, many in heartland

The entry of a full-fledged Apple Store here may edge out authorised premium resellers, especially those in the Orchard Road area, where the store may be located.

Currently, customers who buy Apple products, such as MacBooks, iPhones or iPads, can do so through authorised resellers such as EpiCentre, iStudio and Nubox.

EpiCentre has stores in Ion Orchard, Wheelock and 313@ somerset, while iStudio has them in Paragon and Orchard Central. All are near the Knightsbridge shopping centre, where it is believed Apple will open its store.

An Apple Store near the resellers may draw customers away from these outlets, analysts say.

The possibility that the tech giant may open its first Apple Store here was first raised by fitness chain Pure Fitness in a letter to customers on Monday. It said its gym facilities in Knightsbridge would close in December. The gym and other tenants in the building are handing back space to the landlord to make way for an Apple Store next year, it said. Apple declined to comment.

Senior analyst Clement Teo of market research firm Forrester said Apple Stores are known for their customer experience, which may lead consumers to prefer them to premium resellers.

But IDC Asia-Pacific senior market analyst Kiranjeet Kaur said resellers may still have a place alongside an Apple Store. "I think they'll still have some relevance, considering it's just one Apple Store compared with people buying from multiple locations. From a convenience point of view, it's not like they're going to lose their significance completely," she said.

For instance, customers might still visit these resellers, which have shops in heartland malls, as it is more convenient for them.

Added Ms Kaur: "In Hong Kong, even when Apple Stores came in, premium resellers continued to exist. They just need to offer differentiated options like consultations or value bundles."

EpiCentre chief executive Jimmy Fong said it was "too speculative and premature" to talk about how an Apple Store might affect his business. "If customers want to buy something at retail price they can go to Apple, but if they want bundles or promotions and services they can come to us," he said.

Both Nubox and iStudio declined to comment when contacted.

The Apple Store might have an edge over the resellers, given the after-sales service it can provide. The service is now provided through third-party contractors. But Apple Stores offer after-sales care such as repairs and diagnostics directly.

Housewife Lynn Ong, 32, said while she had no complaints about third-party repair services, she would go to an Apple Store in the future. "I prefer the original, with the staff directly from Apple," she said.

Expansion plans for Apple here may not stop at Orchard. According to The Business Times yesterday, Apple is said to be leasing almost half the space at business park tower Innovis. It is expected to use it for research and development at the 18-storey space at Fusionopolis Two in the one-north area.

A version of this article appeared in the print edition of The Straits Times on October 30, 2015, with the headline 'Apple Store may eat into resellers' profit'. Print Edition | Subscribe