News Analysis: Tech Retail Goes Touchy-Feely

Marketing, November 23, 2005 | Go to article overview

News Analysis: Tech Retail Goes Touchy-Feely


Nokia is the latest brand to open a store dedicated to placing its products in consumers' hands, writes Claire Murphy.

When is a shop not a shop? When it is an 'experience centre'. Last week it emerged that Nokia has joined the small but growing band of retailers creating stores to encourage customers to spend as long as they want playing with their products.

The handset manufacturer has just opened its first experience centre in Moscow, with a network of other sites to follow (Marketing, 16 November).

Designed in a style more akin to a mini-science museum than a high-street mobile phone store, Nokia's experience centres offer the ideal conduit to encourage customers to trade up to higher-priced products.

This is a priority for Nokia; its third-quarter results published at the end of last month showed that while quarter-on-quarter volume sales had increased, average purchases had fallen from EUR105 (pounds 72) to EUR102 (pounds 69).

This led to a fall in Nokia's share price, as analysts expressed worries over whether the handset manufacturer could increase selling prices, particularly in Europe and the US. Although it remains the global market leader, Nokia is coming under pressure in these territories from Motorola and Samsung.

3G boost

In theory 3G, with its wider range of functions, should provide the ideal platform for upgrading customers to higher-priced phones, but the industry's excitement over the technology's capabilities has failed to transfer to consumers.

This has led Nokia to create retail environments in which consumers can touch, feel and play with the handsets, with the intention that they will be enticed by their features and styling.

Nokia is not the only brand trying to control its retail environment and encourage sales of higher-end products. Toshiba, too, is about to launch its first store, in Liverpool.

Bang & Olufsen pioneered the idea of this type of store, creating retail spaces that mimic living rooms to show off its high-end audio products. Apple, meanwhile, has opened three stores in the UK to strengthen the branding of its products and encourage trial (see box).

This week it also emerged that Sony is adopting a dual-pricing strategy, offering discounts to retailers whose staff are sufficiently trained to demonstrate its products to customers. Thus Sony, which was one of the first consumer electronics brands to launch its own stores, is now trying to influence sales of its products in others' stores.

Nokia seems to have been inspired by the Niketown 'destination stores', having poached the sportswear brand's UK retail director, Hamid Raja, to take charge of its strategy shift as director of retail distribution and marketing.

The company has already tested the 'experience' concept on a smaller scale. It recently opened a store in Dubai for Vertu, its ultra-premium handset brand.

Outside influences

The layout of the Dubai store, designed by London agency Dave, was influenced by car showroom displays of materials used in vehicle interiors, such as upholstery, to emphasise the craftsmanship that goes into a Vertu phone.

The outlet includes mini exhibition areas, and a partially walled-off area to create an air of privacy for the sales process.

'We wanted the store to act as a stage for the sales people to perform on,' says Dave creative director Dan Rowe.

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News Analysis: Tech Retail Goes Touchy-Feely
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