Palm to close its retail stores
Posted
Jan 25 2008, 02:34 PM
by
Kim Peterson
Rating:
Palm shares, already down 50% from October, slid slightly further today to $4.86 on news that the company is closing 34 stores -- pretty much all its retail locations -- by the end of March. Palm also plans to pay up to $75 to Treo owners who have had their devices repaired at least twice in the last two years.
The only Palm store left, if you can even call it that, is the one inside its headquarters. Palm had eight stand-alone stores and space in Airport Wireless stores at airports around the country, the Mercury-News reports. Palm began opening stores in 2002, and debuted its flagship store in Rockefeller Center in 2006. The store in San Jose was empty whenever I walked by.
Opening retail locations is a risky strategy for electronics companies. Gateway learned a hard lesson in that department. Some expected Apple to fail, but the company has 204 stores and another 35 to 40 on the way this year. Store traffic averages 14,700 visitors per week.
"Apple spent a lot of money and
time and thought making (its stores) cool," analyst Pablo Perez-Fernandez told the Mercury-News. A
Palm store, he said, "was not a place where you want to go."
What was Palm thinking? This 2005 press release sheds a little light. Palm wanted to reach out to its core audience, the mobile business customer, and figured the airport stores were an opportunity to sell accessories or even an upgrade to a new device. But given all the hassle at airports these days, I can't imagine many people would be in a buying mood.
Palm also viewed the stores as an advertising/branding tool. The company said that 31% of people who visit its stores end up buying Palm products from other retail partners, so even if Palm stores weren't selling well they were contributing to future purchases. But that's a fuzzy number. It's too hard to directly measure a Palm store's impact on outside sales.
In the end, the retail store revenue wasn't there, and Palm, which spent $61 million on sales and marketing in Q3, needed to cut expenses. Closing the stores is a smart move for this troubled company.
