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Some Best Buy stores may feature walled-off Apple boutiques

Electronics retailer Best Buy, which announced Wednesday that it will be expanding its Mac pilot program to about 200 stores, is expected to introduce a radically improved store-within-a-store concept at some locations.

"We believe Apple's store within a store at Best Buy will be much different compared to the current pilot store rollout, which was a table with Apple products on it," PiperJaffray Sr. Analyst Gene Munster told clients in a research note Wednesday evening.

"The difference," the analyst added, "is we expect some (smaller number) of these 200 stores will have walled-off Apple stores, while others will have improved layouts. "

Munster said it's clear from his checks that Best Buy customers "won't wander around" the stores to find Apple products. "A good way to think about Apple and Best Buy is the Coach or Chanel store within a store concept at Nordstrom," he wrote.

Best Buy plans to expand its Mac pilot to approximately 200 stores by fall 2007, up from 57 stores today. While that will account for only a 2 percent increase in physical Mac distribution points, Munster said his calculations indicate that the volume of visitors through Best Buy will actually equate to around a 10 percent increase in overall Mac exposure.

Still, the PiperJaffray analyst warned clients not to expect any material impact from Wednesday's announcement in Apple's June and September quarters, as the full-blown expansion will take some time to complete. However, he said the deal is an obvious indicator that Apple and Best Buy are seeing positive results from their initial tests.

"The relationship is headed in the right direction," wrote Munster. "Evidently the pilot is succeeding for both parties, which could result in a full expansion to Best Buy's 822 retail stores."

Best Buy Apple Planogram

Apple's current "table" display at one Best Buy location | Source: CNet News.com


The move by Best Buy will more than offset the impeding closure 126 CompUSA retail stores, each of which featured an Apple store-within-a-store boutique, representing a net increase of 74 Mac distribution points to Apple's existing 7500 worldwide (or just shy of a 1 percent increase).

In addition to selling Macs and iPods, Best Buy last month agreed to carry the Mac maker's new Apple TV device at all of its retail locations nationwide.