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Thursday, May 03, 2012, 05:24 am PT (08:24 am ET)

Apple expected to expand store-within-store presence at Walmart, Target

Apple's reach will grow to new, untapped markets within the U.S. over the next two years with store-within-a-store retail outlets set to expand at Target and Walmart.

Analyst Gene Munster with Piper Jaffray noted that while Apple currently has just 250 retail locations in the U.S., the company has the potential to reach many new customers by expanding its micro-store concept.

Currently, Walmart has over 3,800 locations in the U.S., and Target has 1,700 stores. Munster expects Walmart to be a significant partner for Apple in expanding the company's presence, as Walmart has better rural distribution.

Apple is currently testing its store-within-a-store concept at two Target locations, and 23 more stores will be added before the end of the year. AppleInsider was first to report in January that Apple would begin opening new outlets within Target locations this year.

In addition to Target, there is also one Apple store-within-a-store being tested at one Walmart in Lowell, Ark. That Walmart features a dedicated space that is distinctly separate from the rest of the big-box retailer's other departments.

Munster visited one of Apple's two Target micro-stores, and found it similar to Apple's existing Best Buy locations, which are present in about 40 percent of Best Buy's U.S. stores. However, unlike Best Buy, Target does not sell any of Apple's Mac lineup.

Walmart

New signage prominently displayed at Walmart's Lowell, Ark. location. | Source: ifoapplestore.com


"We believe the Target/Apple relationship will not expand to the full Mac lineup given Target does not sell a significant line of PCs," Munster wrote in a note to investors on Thursday.

From his visit to Target's micro-store, Munster found that product inventory was unsurprisingly far less than Apple would carry at its own retail stores. However, he did find that Target carried most of the company's product lineup, with the exception of Mac hardware and software.

"The Apple micro-store was staffed by a Target employee who claimed to have received two hours of training from Apple," he said. "Overall, the layout of the Target micro-store was more inviting compared to other Best Buy Apple micro-stores we have visited, in our opinion."

Apple Chief Executive Tim Cook was asked about his company's store-within-a-store initiative and its relationship with Walmart during Apple's quarterly earnings conference call last week. Cook didn't offer much in the way of details, but explained that Apple is "trying some things." He said he didn't expect Apple to be present in 10,000 Walmarts.