Apple Retail Slows Growth, Cuts Employees

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Apple noted during Wednesday's earnings call that it opened just one new retail store last quarter and saw average revenue per store drop from US$7.1 million last year to $5.9 million this year. In addition, its latest SEC 10-Q filing shows that it dropped 1,600 full-time retail jobs from its fiscal first quarter, ending Dec. 31, 2008, to the quarter that concluded at the end of March.

While there are no signs that the company plans to close any stores -- it has yet to do so in eight years of retail operations -- Fortune's Apple 2.0 blog notes that it has been temporarily shuttering stores for renovations "at a stepped up pace." Writer Philip Elmer-DeWitt said: "That doesn't necessarily mean Apple plans to shutter a lot of stores, but it could signal a major reassessment of its retail strategy."

To that end, he quoted a retail management expert who said: "I believe Apple is at a dangerous crossroads with retail and must make very careful decisions here. Apple faces the conundrum of cutting payroll and risking the service part of their reputation because they have sent the sales portion of their product to Best Buy, Wal Mart, AT&T, etc. The product gains wider distribution, the customer gains convenience, but Apple risks running stores in the red or losing their service strength.

"It's just too easy to buy Apple anyplace now, as much as I'd like to see Macs in a Wal-Mart, I believe that would be the death of most Apple stores, because they cannot exist on service alone.

"Either get out of retail or cut back, do not expand, and decide whether you want boutique resellers or mass merchant resellers — do not use both."

Comments

Tiger

I think a reread of the info is in order Brad. Everything I’ve read elsewhere said Apple cut the “equivalent” of 1600 full-time jobs, however, it was through reduction of hours of existing employees, So, they cut 64000 man hours from their payroll, but the actual number of employees eliminated is still unclear. It looks more likely that they reduced overtime or eliminated it for many. But did they actually lay people off? It’s hard to tell with the corporate doublespeak.

And I think we’ll continue to see Apple products such as iPods at Walmart, but as for computers, that’s not likely. Branding is everything and something would just be wrong seeing a MacBook Pro on a Walmart shelf.

Lee Dronick

” Apple faces the conundrum of cutting payroll and risking the service part of their reputation because they have sent the sales portion of their product to Best Buy, Wal Mart, AT&T, etc…It’s just too easy to buy Apple anyplace now, as much as I’d like to see Macs in a Wal-Mart, I believe that would be the death of most Apple stores, because they cannot exist on service alone”

I think maybe Elmer-DeWitt should get out more often. Well maybe what he is seeing in regards to Apple Retail Stores is happening in his haunts, but I have seen the opposite. Our local Best Buy has an Apple/Mac section. It has an Apple shirted rep several days a week, but not all the time. When the Mac guy is not working the Buy guys seem to ignore people looking at Macs. Furthermore there is is minimal Mac software and accessories. On the other hand at the Apple Stores you can hardly play with a Mac or look at the iPhone accessories without a staff member asking if you need help and I see a lot of sales.

geoduck

When the Mac guy is not working the Buy guys seem to ignore people looking at Macs.

And that has been the problem every time BB handles Macs. At heart every BB I’ve been in is a Windows shop with Windows fanboys selling Windows computers. They seem to actively dislike Macs and their owners. I saw this in BB in Minnesota, Nevada, Oregon, and now here in Canada. It seems to be a corporate philosophy.

CP

A retail store cut staff after the holiday season? Quick! Alert the media!

saintlouisranger

Sorry to inform you but, in my town the BB has a full time Apple Rep and count ?em 1-2-3-4-5-6 knowledgeable PC/Mac sales people. It takes a bit of synergy and a good Apple Rep. to make the Apple-Store-With-In-A-Store concept work. We have the highest caliber Apple Rep. in the region and I should know ?cause I trained him on his first Mac 25 years ago. So, that means between the Two of us we have 50 years of knowledge about Macs and Apple. This is not counting the other 5 computer sales folk. Apple is very selective about who can sell Macs and how they are sold. BB has a chance to turn Mac sales on it head, just look at how many iPhones and iPods that BB sells.

gslusher

Tiger is correct and Brad should fix the article, as it contains a significant error, albeit one that many other people seem to be making. It’s amazing how many “financial bloggers” and “analysts” don’t know the difference between “employee” and “full-time equivalent.” Worse, I expect that some making the error are business school graduates.

Lee Dronick

just look at how many iPhones and iPods that BB sells.

You are certainly right about that. The “phone bar” at my local Best Buy is usually quite busy.

WriterGuy

Bad reporting on this story. The filing reported that Full-time equivalent hours were UP substantially year-over-year, but down as compared to the holiday quarter.

Apple retail stores are NOT in trouble—far from it. They’re one of the bright lights in retail.

You’d think the MacObserver site would do a slightly better job of covering Mac news, wouldn’t you???

Ronnie Williams

This is because of the global crises that every business is facing at the moment, every gadget business whether its a high-tech note book or basic cell phone accessories, sale of every product has gone down,

However I also agree with:

“A retail store cut staff after the holiday season? Quick! Alert the media! “

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