Taking a Slice Out of the Apple

In late May Apple launched the iPad in nine international markets — Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the U.K. – and is scheduled to release the devices in Austria, Belgium, Hong Kong, Ireland, Luxembourg, Mexico, the Netherlands, New Zealand and Singapore this month.

The past few decades have seen a gradual shift in power away from brands and toward retailers. But iPad stocks were limited and consumer expectations high after months of media hype, so the carefully managed launch appears to reinforce that Apple is still able to dictate terms.

The success of the iPad in the United States caused a ripple effect of frustration across the rest of the world as the international launch day was pushed back by a month in order to feed demand in Apple’s home market. The international launch was similar to what was seen stateside, with Apple selling the device through its own stores and website and key large electronics retailers in each market. Customers were able to place pre-orders on May 10, but sizeable crowds still turned out two weeks later for a chance to secure the latest must-have item.

U.K. market leader DSGi secured a 60-day exclusive for its PC World, Currys and Dixons Travel outlets to supply the iPad, but did no promotional or marketing activity in support of it. Best Buy has also been selling the device at its first U.K. store in Thurrock.

In Canada, Best Buy is selling the device through its network of Future Shop and eponymous superstores. In Japan, a small number of Yamada Denki and Softbank Mobile outlets are selling the device. In Europe, Apple chose Metro Group’s Media Markt for an exclusivity deal; Carrefour has not been allowed to sell the device in its French hypermarkets, but specialists Fnac (PPR), Darty (KESA), Surcouf and Boulanger are stocking it. In Australia, the iPad was available through David Jones, Dick Smith, JB Hi-Fi and Myer stores.

The rationale behind Apple’s decision to restrict availability to select retailers appears to have been threefold: management of limited stock levels, maximizing excitement and increasing pre-orders directly from the manufacturer. As there was so much secrecy shrouding who would and wouldn’t be selling the iPad, many consumers felt the only way to guarantee securing one was to head down to an Apple store.

Three days after the international launch, Apple CEO Steve Jobs announced that 2 million iPads had been sold worldwide in the first two months of availability. International customers have snapped up iPads at such a fast rate that stocks have run out in a number of retail locations, including Apple stores themselves. With many predicting that sales of the iPad will reach 5 million by year’s end, it seems as though Apple has another instantaneous hit.

What can retailers do?
Although rival developers like Dell and HP are set to bring tablet devices to market, there seems little doubt that the desirability of the Apple brand will continue to drive sales forward this year. This is great news for Apple and those retailers selected to sell the iPad, but for those on the sidelines, missing out on one of the year’s hottest product launches could have a significant impact on sales.

Retailers have little choice at the moment but to play Apple’s tune. Across the industry, there appears to be little doubt that the iPad will eventually be available at retailers like Amazon and Walmart, as has occurred with the iPhone. For the moment, however, bypassing the non-specialists ensures that Apple maintains the desirability of its products in the months after initial launch. The aim is therefore to ensure that retailers are next in line when the device becomes more available in the future.

Electronics specialists should look to partner with Apple and roll out the increasingly familiar branded implants within their stores. In addition, those not able to sell iPads initially should focus on promoting and selling devices like netbooks and e-readers — at discount prices. There is a clear opportunity to focus on things the iPad cannot do (such as take photos) or its perceived weaknesses (on-screen typing). Retailers should actively promote comparable rival products that outperform the iPad in these areas.