A Target expansion would broaden Apple’s halo effect

Apple (s aapl) could add considerably to its retail reach, if a new report out Friday is accurate. According to a “source familiar with Apple’s plans,” AppleInsider says Apple will bring store-within-a-store retail outlets to Target (s tgt) locations sometime soon, helping it reach markets Apple’s own stores don’t cover.
Apple initially intends to open mini-store locations, like those it currently uses at select Best Buy(s bby) locations across the U.S. and Canada, in 25 Target locations in areas where a standalone Apple Store isn’t economically viable, according to the report. Target has 1,752 stores currently operating in the U.S., more than Best Buy’s roughly 1,100 locations. Apple now has store-within-a-store setups in more than 600 of those Best Buy locations.
Target stores currently offer iOS devices, including the iPod and iPad, as well as the iPhone in stores that have Target Mobile sales centers. The rumored expansion would allow the 25 pilot stores to begin offering sales of Mac computers, as well as other Apple-branded hardware and peripherals. Bringing Macs right into the stores could help capitalize on the so-called “halo effect” of iOS devices, which sees Mac sales increase in proportion to the iPhone and iPad’s success. Customers who come in to Target for an iPhone would be more likely to at least take note of and consider a Mac purchase, too, since all those products would be available for hands-on trial in one place.
This isn’t the first time people have suspected a limited retail partnership would lead to something larger. Back in December 2008, Walmart (s wmt) began selling iPhones, and then in 2009, Barclays analyst Ben Reitzes suggested that along with iPod sales they would be precursors to the store-within-a-store model being adopted at Walmart locations. So far, that hasn’t happened, but there’s good reason to suspect Target is a better candidate for this kind of setup.
The main reason is that Target appeals to a different demographic than Walmart. Target’s crowd tends to be closer to Apple’s core market audience, namely middle-class buyers with more cash to spend. Selling Macs, which are for the most part much pricier than iOS devices, is a good fit for Target’s customer base, especially in places Apple’s own retail shops can’t reach.
Photo: Some rights reserved by Chris Coyier