Daily Archives: December 10, 2009

Nokia Extinguishes its American Dream as it Closes Flagship Stores

Nokia has announced that it will close its “flagship” retail stores in London, New York, Chicago,and Sao Paolo. It hopes to find a new retail location in the Brazilian city, but it has thrown in the towel on the branded-store strategy in the UK and the USA.

What happened? According to Nokia:

“In North America, over 90 percent of consumer purchases are made through carriers – Nokia continues to support our relationship with carriers in this market, as well as the continued expansion of our retail partner network with the likes of Amazon and Best Buy (for example), in line with our strategy. As we continue to expand our services and solutions offerings across these various channels, we have decided to close the NY and Chicago stores to allow more concentration on our other channels.

Nokia is increasingly investing in its retail network. Nokia Flagship Stores are only one aspect of Nokia’s retail experience and marketplace strategy, which includes more than 1,000 Nokia branded retail stores and their more than 650,000 retail outlets globally. . . . “

Nokia is correct in saying that more than 90 percent of consumer handset purchases in North America are made through wireless operators. Initially, though, Nokia said its branded stores were about more than handset sales. The stores were supposed to be a means for Nokia to introduce itself and its new products and technologies to consumers in a high-end retail setting The stores were as much a branding exercise as a retail sales conduit.

Perhaps, in this era of “jobless recoveries” and other Orwellian reality muggings, Nokia believes a branding strategy, especially one that involves having its own high-end retail outlets in large US cities, no longer makes sense. It’s probably seen as a luxury that can’t be justified in harder, leaner times, especially as US consumers are spending less than they did before and as Nokia’s core markets in developing countries are evincing better growth prospects. Nokia might think the idea of flagship stores in the United States was a good one, but that its time has passed.

Besides, Nokia never managed to emulate Apple’s success in consumer branding. Apple has ardent followers, in North America and elsewhere, and it has a cache and reputation for delivering stylish, well-designed, fashionable products. Put simply, Apple has a direct emotional connection with the North American consumer. Nokia doesn’t have that, and I don’t think it ever did.

In North America, the Apple brand elicits a strong reaction. Nokia? Not so much. Nokia has a brand, yes, and it does better with its handset sales in the developing world than in the USA. (It still holds its own in Europe, too.) But that’s about it.

Really, though, Nokia’s customer — the audience with which it has its special connection — is the wireless operator, the carrier, not the consumer. At its best, Nokia delivers handsets that carriers need, not handsets that consumers want. Apple insists on having a direct relationship with consumers, but Nokia has been content to let carriers facilitate and intermediate those relationships. That difference shows in the products, and the business strategies, the two companies have pursued.

For a while, Nokia had delusions of grandeur. It thought it could become an Apple-like consumer behemoth while continuing to serve as a handset-fulfillment shop for wireless operators. Those roles, though, if not directly antithetical, do not coexist easily. There’s a difference between products people want and products that are convenient to buy.

I’m not sure whether Nokia has resolved the issue of who and what it wants to be in the handset world. With this move, however, it has gotten closer to recognizing some hard truths, about itself and about the world in which it find itself as 2009 draws to a close.