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."

Comments

Don't worry retailers, we're getting out...

[LostCluster]

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...

Re:Yeah.

[phorm]

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.

Re:Confirmed: Not an April Fools Joke

[LostCluster]

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.

Its about time

[pete6677]

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).

Not Funny Mods

[Anonymous Coward]

People getting fired in an already bad economy isn't funny

Apple and major retail chains

[Infonaut]

"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."

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.

"Custom" PC's

[nonameisgood]

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.)