Sleeping with the enemy takes on new meaning at Mac-O-Rama in Reno.
Owners Jason Dietrich and Alicia Lindsay-Dietrich sell Apple music and computer products supplied by Apple Inc. in direct competition with the Apple-owned store at Summit Sierra.
"It's a weird relationship," says Lindsay-Dietrich. "Our vendor is also our biggest competitor."
And the playing field isn't even.
Mac-O-Rama doesn't buy merchandise on the same terms as does the Apple store. Apple sets the price at which products can be advertised, limiting promotional pricing to information delivered to customers over the phone. Apple requires that its certified specialist retailers keep technicians on staff and generate a specified percentage of their sales from computers rather than iPods or accessories.
But the chief challenge to all computer vendors, says Dietrich, is slim margins on hardware.
"Ten to 15 years ago," he recalls, "you could make a $1,500 profit on a $3,000 computer; now that's down as low as 5 percent."
Why, facing such a litany of difficulties, would anyone want to be in the business?
"We're Mac evangelists," says Lindsay-Dietrich.
But then Apple opened a direct store at Summit Sierra. "When the Apple store moved in we saw a 50 percent drop in our sales of Apple CPUs because they're so visible at the Summit Sierra location," she says. "It's hard to combat a new store with deep pockets. They get allocation of new or hard-to-get products first."
So Mac-O-Rama instead looked to its strengths.
"Our service remained strong, and that's really where we make our money," Dietrich says. "They will not make on-site service calls. We will. They do not do hard drive recovery. We do."
The company also offers classes such as Mac Essentials six, 90-minute sessions in Apple basics that serve a niche market seldom touched by community colleges and training firms.
The Dietrichs put great stock in fostering relationships. "Since the Apple store came in we think more about the community," says Lindsay-Dietrich. "We shop locally and support local businesses. Apple sees this as a marketplace. We see it as a community."
Business customers such as a tile design company and a blue jeans boutique remain the bread and butter of Mac-0-Rama.
Graphic design firms remain loyal to Apple, and Mac-O-Rama reaches out to that market.
The couple started the company as a Web-based business run from their home in Washington State and after moving to Reno, continued that business model for two years. In 2002 they opened a retail store on Matley Lane. They moved to Longley at Mira Loma in 2004.
They're looking to follow the lead of the Apple store and plan to move to RED Development's Legends at Sparks Marina. They've staked out a spot between Target and Wal-Mart in the new center.
"It's a potential place to compete with the Apple store," says Lindsay-Dietrich. "We're thinking of a retail store that has a lot of inventory and a lot of traffic. As visible as the Apple Store at Summit Sierra but more warm and welcoming. A nice showroom, a flex classroom area to launch new products and just a small service bay - with a larger service center elsewhere in a lower rent district."
But Legends won't open until 2009 and Mac o Rama's lease at the Longley Lane location is up in September. What to do in between?
"We want to develop a serious business based on service contracts," she says. "But retail sales could be much better if in a better location."
