Slashdot Mirror
Gateway To Close All Retail Stores
John Lazzaro writes "Looks like Gateway is throwing in the towel and closing all of its remaining retail stores, according to a Reuters/Yahoo! report." The story notes: "Gateway's stores, which will be closed on April 9, have long been criticized by analysts and investors as an expensive drag on cash flow because of lease costs and the difficulty of managing inventories", and goes on to suggest: "...with [the acquisition of] eMachines, Gateway doesn't necessarily need the added distribution channel the stores gave the company. In addition to selling Gateway's wares over the phone and via the Internet, eMachines PCs are sold at major retailers such as Best Buy."
Huh. Go figure.
Information wants to be anthropomorphized.
The Gateway Store was mainly a "showroom" environment because Gateway's main product is a made-to-order PC. Gateway could never get into a Best Buy or Circuit City environment because they didn't want to cheapen their customizable image by providing computers that would sit on shelves. Meanwhile, eMachines is the sit-on-the-shelf cheap PC that you can find at Best Buy and Circuit City along with discount environments such as Wal-Mart.
Shutting down the stores is more or less a nod to the retail chains that they can have eMachines all to themselves, and there's no danger of having to compete with eMachines coming out of a Gateway Country store. Even if those eMachines PCs had a "Gateway" sticker on them, it'd still be just as bad to the retailers... they don't like suppliers who are trying to undercut them by operating their own retail stores.
This is one of the forces that limits Apple's distribution. Apple choses to sell mostly directly and therefore they aren't making much of a push to get themselves into major retail chains... Since Wal-Mart can't undercut Apple's prices, Wal-Mart's not particularly interested in having Apple.
So, there's a nice firm wall going up at Gateway. Made-to-order PCs will be ordered by phone or Internet and be stamped Gateway, mass-made machines will be in retail stores and called eMachines. Everybody should be happy...
couldn't this have been posted tomorrow?
-a disgruntled gateway customer
Indeed, otherwise such stories - if false - might negetively affect Gateway's stock. Yahoo might be in for some A/F humour, but wouldn't chance a story of this type because of the possible legal repercussions.
Although Apple seems to be doing quite well in retail, Gateway was losing money hand-over fist. (Gee, think that could have anything to do with quality?)
Nah, more to do with uniqueness. You've got to go through Apple to get a Macintosh that runs OSX... but anybody can make sell you a PC running Windows. Apple therefore can keep tighter control over their retail prices, while an undercut from a competitor can force a PC maker to lower prices.
What exactly could those stores accomplish that could not be done with a kiosk in a shopping mall (kind of like their biggest competitor)? Like the article said, they were simply a money drain and keeping inventory in the store kind of defeats the purpose of the build to order model. Now if only Dell would get out of the super-saturated consumer electronics market and we just might see Dell and Gateway going back to competing to build the best computers (wishful thinking, I know).
Their litigation has helped fight spam. Good Thing.
--
the strongest word is still the word "free"
People getting fired in an already bad economy isn't funny
the country stores didn't really make sense in a lot of areas around the US, people look for computers at big stores like best buy or good guys, or look online. Gateway will now compete in both places(thanks to emachines), and not have to rent a bunch of storefronts to cater to only a few passer bys each day. Those stores required quite a few employees to operate, and didn't generate a lot of business, except in places like New York or Manhattan where those type of stores are popular.(I bet they will keep a few open there) They just trimmed the fat in my opinion and I think it was a good move
I think you're confusing cause and effect here. Apple chose to go direct precisely because their forays into big box retail had been so unsuccessful. BestBuy, Circuit City, Computer City, Office Max, Sears - Apple has tried them all. In every case Apple's products were marginalized by big-box salespeople who didn't know the first thing about Apple technology and had no interest in learning about it.
Apple's retail presence is far greater now that they control presentation of their products. They've selected marquee locations and they showcase Apple products "in the wild" so customers can play with Macs, digital video cameras, add-on devices, and so on.
Wal-Mart was founded on deep price discounting. Volume of sales for already established commodity products is their bread and butter. Wal-Mart is, as you pointed out, not interested in getting into a business where they can't undercut the competition. Apple is likewise uninterested in making a deal with Wal-Mart, because they'd rapidly lose control over the value of the Apple brand.
Read the EFF's Fair Use FAQ
Dell is dabbling with several retail kiosks.
You can try products and place orders. They may have some full size stores somwhere too.
You bought a 386 in 1995?
Let's not fool ourselves into thinking that Gateway knows things we don't about how to plug in a PCI card or install a HDD.
They failed to underestimate the "I want it now" of customers. If they want to wait, they will order online for a few dollars less.
It would have worked if they had put a single, well-trained tech in every store to "customize" your box (the computer you pervs), and boom, you're out the door with a custom Gateway PC in 15 minutes. If you want a burn-in, pick it up tommorrow.
Or is a factory-built PC somehow special (having been in a few assembly plants, don't count on better, necessarily.)
Faith is the very antithesis of reason, injudiciousness a critical component of spiritual devotion. Jon Krakauer
I'm not a big fan of California: too many people, too much pollution, too much traffic, costs too much to live. If I could, I'd move in a heartbeat. Not the absolute boonies, but one of those middling places where there's enough people to have a decent cultural life. Hundreds of places like that in the U.S., but none of them need the kind of talent I have.
IMHO, Gateway's retail stores were doomed from the get go. Perhaps the target customer for the stores was someone who, unlike me, wouldn't otherwise go to Gateway's web site, but for me I found the stores to be next to useless. Why?
Well, at least when I went in a few years ago, you could not actually buy a computer from the store, per se. They would order one on your behalf, to be shipped to your house - in other words, exactly what would happen if you simply ordered the computer from their web site, complete with the shipping charge and the accompanying delay in getting your computer. In fact, I think if you elected to order one, the salesman would literally log in to the same Gateway web site that everone has access to and enter your information for you.
All the stores amounted to, then, was a place to see the hardware and use it hands on before you made a purchase - in other words, not really that useful at all.
Apple stores, on the other hand, will probably be successful in the long run, I suspect. Why? Well, first, at least in my area, they seem to actually have selected good locations, where there is a lot of foot traffic, and they always seem to be crowded. Second, you can buy pretty much anything you see in the store, on demand. Third, the Apple brand and their reputation, to go along with the fact that to the average consumer, Apple's products look and feel cool and hip, not like the boxy PCs sold by Dell and Gateway.
Understanding is a three edged sword. - Ambassador Kosh Naranek, Babylon 5
I think I may just swing by my local Gateway Country store and see if there any 'open box' values to be had. I suggest you do the same!
Distribution channels at retail without a lot of work. Large retail outlets like Costco. I suspect that Costco sells a lot of PCs. I don't know what E-Machines profitibility of late, but they started with a very lean infrastructure. Few people --the ceo/founder, a secretary and about 17 sales people-- and contract builds by KDS and ??? in Korea with drop shipping to the retail outlet directly.
Gateway could use some cash management skills and a method of being profitable. Retail is likely the only way in the near future they are going to get it since Dell, Tiger, IBM and HP aren't going way any time soon and seem much better run. The E-Machines model gives them that.
I'd say this is a hell of a lot better move than when NEC mergered with Packard Bell. That still makes me shudder.
Does anyone remember CompuAdd? They were a struggling mail order PC firm that opened stores all across the country.
Unlike Gateway they did stock a few machines but mostly they had to order them for you like Gateway.
When I first heard about Gateway opening stores I knew it was a big mistake. How could Gateway not learn from CompuAdd's failure? But that's exactly what happened.
Apples high margins may save them but don't be surprised if their stores are eventually closed. It's not a winning business model.
Man Holmes