--Neither retailer is adding Apple personal computers By Karen Talley Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) are expanding their offerings and display areas for Apple Inc. (APPL) products, hoping that customers will not only come in for the hot merchandise, but shop in other parts of the stores. The rival retailers launched test programs in mid-April, with Wal-Mart adding an "Apple Shop" to a store near its Bentonville, Ark., headquarters, and having plans for 24 more. Target has expanded its Apple offerings at about 20 stores in its home state of Minnesota and in California, where Apple is headquartered. In each case, Wal-Mart and Target are seeking to help reignite sluggish same-store sales growth by tapping into Apple's popularity with consumers. For Apple, expanding its relationship with two huge retail partners will help the company get its gadgets to more places, especially rural areas. The retailers already offer primary Apple products such as iPods, iPads and iPhones. Wal-Mart, under its pilot, has added an Apple "store-within-a-store." The retailer is also adding iPad covers; cases for iPads, iPhones and iPods; Beats headphones; and cases for tablets at all its stores. Target's test involves providing Apple merchandise including a TV device that allows streaming videos and music, a Time Capsule computer backup device and its Magic Trackpad, which is a replacement for computer mice. Target is also enlarging its display area and allowing customers to touch, play and interact with Apple products. The plans come as Target is phasing out Amazon.com Inc.'s (AMZN) Kindle products from its stores. Neither retailer is adding Apple personal computers. The effort by the two huge retailers speaks to the cachet that Apple products have and how they are being tapped as business builders. "Any retailer that can increase their Apple offerings has a great opportunity to improve their sales, and more importantly, increase their customer traffic, so you get a double win," said Craig Rowley, vice president of retail consulting for the Hay Group. Since introducing the iPhone in 2007, Apple sales have more than quadrupled to more than $108 billion as customers have snapped up the company's gadgets and accessories. Wal-Mart and Target could use the added business, with both having spotty recent same-store sales. Wal-Mart's U.S. division has posted two quarters of modest gains after nine straight quarters of declines. Over the past year, Target's monthly same-store sales have missed the expectations of analysts polled by Thomson Reuters nearly a half-dozen times. The Apple shops will "drive customer loyalty," said Duncan Mac Naughton, Wal-Mart's U.S. chief merchandising officer, at a recent industry conference. Wal-Mart has said 53% of its customers own a smartphone, 32% own a tablet and 75% own a laptop. "This is really about converting that next sale; about what do they need to make all these different products run," Mac Naughton said. The Apple product additions are "part of our commitment to offering a really innovative shopping experience," Target spokeswoman Molly Snyder said. Helping Wal-Mart and Target is that competition remains pretty thin. The two are believed to be the only major non-electronics chains in the U.S. selling a broad range of Apple products in their stores. Meanwhile, Best Buy Co. (BBY) continues to struggle, and Apple's own stores--while popular--remain limited in comparison to Wal-Mart and Target. Apple, when asked about the test programs at Wal-Mart and Target, reiterated comments made in April by Chief Executive Tim Cook during the company's second-quarter conference call. "We're trying some things and seeing how it goes...and hope to continue expanding," he said. Gene Munster, research analyst at Piper Jaffray & Co., said a big benefit to Apple could come from its program with Wal-Mart. "The true expansion of Apple's product line to untapped rural U.S. geographies would likely come in the next two years as Wal-Mart expands the Apple micro-store concept" to Wal-Mart's over 3,600 U.S. locations, he said. Munster also said he had visited one of the Target test sites, and while having far less inventory than Apple stores, the location did carry most of the product lineup, excluding Macs and software. -By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com --Ian Sherr contributed to this article.
