Samsung Store

An existing Samsung store in Sydney, Australia.
An existing Samsung store in Sydney, Australia.

 

Samsung Electronics is working on the establishment of its new offline stores worldwide to compete with Apple. The Korean tech giant’s decision to target the European and North American markets first is related to its goal to curb the US firm’s dominance in these markets. 

In fact, Apple is using advanced marketing strategies through its 400 retail stores scattered around the world. The representative example is the firm’s strategy to stage “iWait” using dedicated space, which describes the phenomenon where consumers wait in line when a new product is launched. iWait is widely acknowledged to play a decisive role in making Apple’s brand image and value easily recognizable in the world. Based on enhanced brand awareness, an Apple store reportedly turned over $16.7 million (around 17.795 billion won) on average as of last year. 

An official at Cheil Worldwide, an advertising agency of Samsung Electronics, said, “After internal reviews, it was determined that the creation of Samsung’s retail stores overseas would greatly contribute to increasing consumer trust about Samsung phones and the brand awareness of the company.” The official added, “By choosing the Apple Store as the benchmark, we are currently examining the concept of the store and its exterior design, and moving forward with a plan to set up 150 offline stores first in Europe and North America within the year.”

The Korean company is planning to actively use the Samsung Store to target the LTE market in Europe, where LTE services will expand starting this year. The firm is also going to target the entry-level smartphone market, which has begun to expand in 2013. Samsung believes that its own one-stop location for promoting, experiencing, and selling new products will make it easy to increase the number of loyal customers. 

So far, the tech firm has mostly used a B2B business model in the European market that supplies its smartphone terminals to mobile carriers. Now, it intends to secure a large number of royal customers through direct selling, which increases customer contact points. 

In particular, Samsung will reportedly create stores mostly in the Eastern European market. It is expected to open stores under its direct management in the Czech Republic, the Slovak Republic, Romania, and Poland, along with independent stores in Poland, Croatia, Spain, the UK, and France. 

An industry source said, “Samsung Electronics became the world’s largest smartphone vendor without operating retail stores worldwide.” The source added, “The reason for the establishment of the Samsung Store appears to be part of the firm’s strategy to widen the gap with Apple in the global market by increasing its brand value in Europe, which is the world’s biggest market of Samsung products.

In North America, Canada is the first target area. The Korean firm is said to be preparing for creating independent stores and then allowing local retailers to run the stores, because its brand is less recognizable than that of Apple. On top of that, direct sales requires a big investment.

The stores are likely to be operated in partnership with Best Buy, the top retailer for consumer tech in North America. Once distribution networks in Canada are built, the Korean firm is planning to set up independent stores throughout the U.S. Samsung’s move is partly attributable to the fact that it is seeking to target the North American market, which is Apple’s stronghold. Among six regional markets in the world, the North American market is the only region that the Korean tech giant has failed to nab the top spot in smartphone market share rankings.  

The fact that last year Samsung hired Tim Gudgel, well-known for having designed the Apple store with a curved glass roof on Manhattan’s Upper West Side, as a retail store designer can be understood in the same context. The firm is expected to target the North American market by first opening its retail stores as early as in April, and establishing over 80 independent stores within the year.   

With the expansion of the smartphone market, the mobile accessories market is also growing rapidly, which is estimated to be worth around 50 trillion won (US$47.5 billion) per year. Since Apple is increasing its share of the accessories market through its Apple Stores, Samsung is also seeking to directly manufacture and sell mobile accessories.

Meanwhile, the US tech giant has yet to release its wearable device “iWatch,” owing to technical problems. The Korean arch-rival, on the other hand, has recently made a plan to dominate the mobile accessories market through the Samsung Store by rolling out fashion items (smart watches) equipped with mobile health technologies such as the Gear 2 and the Gear Fit. 

Since Samsung has already featured the S Health app in its smartphones prior to Apple, the Korean company is able to sell accessories like S Band, HRM Band, and Body Scale, together with smartphones. The firm is said to be preparing for the opening of online shopping malls for smartphone accessories at home and abroad.  

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