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Monday, September 19, 2005, 02:00 pm PT (05:00 pm ET)

Apple rethinking mini retail store strategy

Apple Computer is said to be experiencing difficulties with its initial batch of mini retail stores and may be forced to rearrange or put on hold future plans for the scaled-down retail format.

Following a high-profile launch of its first six mini stores last October, Apple went on to add three additional locations by the close of the year. But since opening its ninth mini store at the Saint Louis Galleria on December 18th, 2004, the company has yet to launch any additional stores based on the format.

While rumors indicate the mini format may be suffering for a variety of pitfalls, sources recently told AppleInsider the most prominent issues ironically stem from a lack of storage, display and inventory capacity in the tiny stores, which are only several hundred square feet.

As a result, some mini stores have had to resort to the painstaking process of convincing customers to place orders online from the stores in order to receive products that are not stocked, or are out of stock, at the stores. Sources say these issues have lead Apple to focus the majority of its future retail efforts on larger store formats, which are rumored to be more profitable per square foot.

Apple's original mini store design has also been plagued by some aesthetic issues. Specifically, the bright-white epoxy flooring used in some of the mini stores quickly proved to be prone to scuff marks, dirt and debris, which combined to degrade the clean appearance of the stores. The stainless steel siding used in the stores is also expensive to manufacture and import from Japan.

In July, Apple replaced the white epoxy flooring at its Stanford, Calif. mini store with a granite stone flooring and also added a centralized display counter to broaden its product offerings. Plans to extend similar renovations to its other mini stores were said to be in the works, but are now rumored to have been placed on hold while Apple reevaluates the mini store format.

According to ifoAppleStore, a website which closely follows Apple's retail initiative, the company had started on plans to open three additional mini stores located in Hingham, Mass., Los Angeles, Calif., and Chicago. However, sources say Apple may have recently decided not to peruse at least one of these one of the future locations due to the ongoing performance concerns associated with the stores.

Upon the launch of the first mini stores, many Apple followers held high hopes that the kiosk-style boutiques would allow the company to expand into non-traditional markets. At the time Apple Retail vice president Ron Johnson hinted that the mini stores were prime candidates to open shop at airports, where customers could buy iPods and accessories on the fly.

Further reports hinted that Apple in 2005 would open mini stores in England, Scotland, and on several US college campuses. So far non such store openings have been announced.