Square reviews Apple Premium Reseller strategy

V2 refits and competition from Apple's own stores prompts partner to close historic New Oxford Street outlet and review others

Square Group has shut its historic Apple Premium Reseller (APR) store in central London and is reviewing its two other standalone APR locations, in response to Apple's store expansion strategy and the costly refits it is being asked to make.

Apple is forcing all APR stores to adhere to the plush new V2 format by January.

Square managing director Darren King admitted all APR partners face a tough choice over whether to shell out on refits or throw in the towel.

"The positive side is that Apple is trying to ensure the customer experience is consistent and is improving with each review it makes," King told ChannelWeb.

"But the reality is that margins are tight in the APR channel and I think everyone will be reconsidering what to do in this space."

Square will continue to operate its V2-format APR outlet in Selfridges in central London, which is doing "exceptionally well", according to King.

But the firm closed its central London store on New Oxford Street, which had been open for 13 years and was purportedly the first high street store in London to stock Apple, at the end of August.

Square's Derby store will become an Apple Authorised reseller in January as its dimensions do not conform to the V2 format. Meanwhile, King said the firm is still discussing whether or not to continue running High Wycombe as an APR.

Apple's store expansion strategy has seen it open outlets in several towns and cities where APRs are already situated, including in Edinburgh, Brighton, Bristol and London, some very nearby. It is poised to open new locations in Oxford and Coventry, with Derby rumoured to be not far behind.

King admitted Apple's stores in Covent Garden and Regent Street had taken the shine off sales.

"We were between the two largest Apple stores in the world, which put us in a chokehold and made it tough to compete," he said.

Upgrading a store to V2 status is thought to cost about £110,000 and ChannelWeb knows of at least one other APR that is giving up the ghost in January.

Robert Peckham, chief executive of industry body MacTechnology, warned that Apple's store expansion strategy was back on track after a period of muted activity when Covent Garden went overbudget.

"There is a feeling that Apple is asking for too much from its APRs in terms of financial investment," Peckham said. "It has to be said in Apple's defence that they supported APRs greatly when their stores first opened - now payback is coming."

Besides Square, there are eight UK firms that operate at least one APR: Stormfront, KRCS, Western Computers, MCC Digital, Farpoint, Albion, Solutions Inc and AT Computers. Stormfront is by far the largest, with 18 APR outlets but there are about 55 APR stores in total.

King predicted the bigger APRs would continue to grow, but feared smaller ones would be forced to review their strategy in the same way as Square has.

He emphasised that retail had never been a focus for Square, with the firm joining the APR programme midway through the last decade "almost by accident". The firm, which last year turned over £28m and focuses on the enterprise, education and creative sectors, recently moved into new digs in London Bridge.