Those who remember walking into a Service Merchandise may recall the assortment of toys, electronics, and fine goods where the selection was larger because there was only one of everything. That’s because you ordered your item in-store and picked it up from a warehouse in the back. It was the pre-Internet version of Amazon.com and it could be Amazon’s next move.
On May 15, 2001, Steve Jobs led a group of journalists from a hotel in Tysons Corner, Virginia to Apple’s first store in the second level of Tysons Corner Center for a commemorative press event. The first two Apple Stores opened on May 19 in Tysons Corner and later the same day in Glendale, California at Glendale Galleria. Around the same time Service Merchandise was going through Chapter 11 bankruptcy and by the beginning of 2002 they would be out of business. Apple now has over 200 stores and Service Merchandise is now online-only. So what can we learn from Apple’s success and Service Merchandise’s failure and what does it have to do with Amazon?
Service Merchandise was a catalog showroom, which meant it showcased a lot of high-end goods and sold them to people who may not have bought them otherwise. I can remember salivating over their boomboxes and Casio watches, things I would never have been exposed to otherwise. This is how the Apple Store has leveraged their retail outlets. Apple used the iPod to get people familiar with Apple products and to come into the store. There they were exposed to Mac computers and any new innovation that came along (think iPhone and iPad). By situating themselves in high-end shopping centers, Apple made sure that the trend-setters were well taken care of and that is partly why there are sometimes more employees inside an Apple Store than customers. What if Amazon opened a catalog showroom in upscale malls around the country like in Glendale, California, Carmel, Indiana, or Manhattan, New York, and showcased their upscale goods – the ones they stock, but people don’t see – and helped change the way people think about Amazon from being an online bookstore or even an online version of Wal-Mart to being the best way to buy anything – including high end goods like watches and jewelry. Could a retail outlet store like Service Merchandise do that for Amazon.com?
Let us know what you think in the comments.