Apple addresses retail strategy

Apple seems to be determined to get its SA retail strategy right after failing to make inroads into the local market.

However, an imaginative product line, a revamped retail and corporate sales strategy, coupled with the improved rand exchange rate, have helped the company to grow its South African revenues by 22% in 2003 and unit sales have risen by 18%.

Ten years after re-entering the South African market, Apple still has less than 2% of the local R1 billion desktop market - a market share that is little better than the roughly 1% it had after being absent from the country for the eight years before 1994. This is even lower than Apple`s worldwide market share average of about 3.5%.

Apple`s SA country manager Bruno Verolini says the company is beginning to benefit from an improved retail strategy after a number of rather disappointing relationships since 1994.

"Our past retail strategy was not particularly good. Most of them came out of the graphics industry rather then the IT industry and so were not great at the sales. We also needed a better relationship with value-added resellers and system integrators," he says.

The Core Group is the only distributor of Apple products in SA. Apple is hoping that by focusing on one distributor, it will avoid the mistakes of the past. Two of its previous distributors, Siltek and HNR Computers, no longer exist, and another, Venture Computers, opted out and decided to focus on printers.

Apple`s retail strategy now focuses on its new online store and Apple Centres in Johannesburg and Cape Town.

Apple`s South African sales of other products have emulated the company`s success overseas. Sales of the iPod flash memory MP3 music recorder have been good, as have sales in the G4 and G5 Mackintosh ranges. It has maintained its traditional dominance of the local creative content industry with a market share of about 80% in the graphics design, desktop publishing and video-editing segments.

However, Apple wants to penetrate the corporate market with its wireless LAN and higher end products.

"The changes have largely come from Apple and the retail strategy has had to change," says Rodney Ichikowitz, CEO of The Core Group. "We are now emphasizing that Apple can put in place a total solution."

But the SA market remains a drop in the ocean for Apple as 50% of its sales come out of the US and 30% from Europe.

"Apple`s strategy is to invest in markets that will give it significant growth. The growth rates should be higher in the emerging markets," Verolini says.