Apple Retail Store Expansion

  • Posted: 17 February 2012 02:00 AM

    Apple Retail Store Expansion: What’s keeping Apple from expanding to more markets?

    In 2012, about three quarters of new Apple Stores will be built outside of the US, which is a pretty strong commitment for Apple, which has been focusing most of their efforts on the US market in the past. Retail is a very slow process, especially for Apple, which has the highest self-imposed requirements for their stores. They are building about 40 stores per year. In 2001, Apple began knowing nothing about retail at all, so as a shareholder I appreciate that they’re being cautious. Language, currency, supply chain, electronics buying patterns, laws, hiring and training etc. is different for every country, so I understand they can’t move to fast but it’s still frustrating to see so few international stores out there.

    I hope we can discuss possible entry barriers to international retail markets in this thread. I understand that they’re moving slowly in markets like the BRICS, but what’s keeping them from expanding to the Netherlands, Belgium, Sweden, Austria etc. or building more stores in bigger European markets? What happened to the push to China where they wanted to have 25 stores by the end of 2011? They are planning to make bigger stores but what does that mean for their expansion plans? As far as I know, there was no word from Tim Cook about retail expansion during the GS conference.

    For information about Apple Retail Stores: http://www.ifoapplestore.com/db/

    [ Edited: 06 October 2014 01:21 PM by Intruder ]      
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    Posted: 17 February 2012 02:49 AM #1

    Apple will build only where actual sales are already high.  For their premier stores, only the best locations will attract their attention.  This is especially true in the USA.  Outside of North America, Apple is willing to make a big splash.  It is puzzling that many countries are underrepresented.

         
  • Posted: 17 February 2012 03:09 AM #2

    In China alone, there are dozens of cities where Apple could build retail stores. Existing stores are located in Beijing, Shanghai and Hong Kong, so apart from expanding within those cities, Apple’s expansion could include Guangzhou, Shenzhen, Tianjin, Hangzhou, Suzhou, Chengdu, Chongqing, Nanjing, Wuhan, and more…

    In Japan, they ran into some demand problems a few years ago so the expansion has stopped temporarily. When demand started picking up again, Japan was hit by the tsunami, so I don’t think they have big plans for Japan right now but there is huge potential there.

    Korea is another big market in Asia but retail for foreign companies is apparently quite difficult there, so there will be no Apple Stores for the time being.

    Within the BRICs, Apple’s priorities for market expansion (for the company as a whole, not just retail) are as follows, at least that’s my impression after listening to Tim Cook: 1. China 2. Brazil 3. Russia 4. India

    However, he has ruled out Brazilian stores in the near future, so Russian and Indian stores are probably quite far out as well.

    My best guess is that Apple will enter the Netherlands, Belgium, Sweden and Austria next and focus their resourses on expanding in their existing markets.

         
  • Posted: 29 February 2012 05:40 PM #3

    Amsterdam store opening this week.
    Here’s what folk are saying about it on TripAdvisor:

    http://www.tripadvisor.com/ShowTopic-g188590-i60-k5182200-Apple_Store_Amsterdam-Amsterdam_Noord_Holland.html

    I’ll be there in May to check it out!

    No Ferrari for me but I do like to travel!

    [ Edited: 02 March 2012 03:19 PM by daveynb ]      
  • Posted: 02 March 2012 03:18 PM #4

    Massive new store for Paris?

    http://www.macrumors.com/2012/03/02/rumors-of-massive-apple-retail-store-for-paris-as-virgin-vacates-prime-location/

    More and more, the European stores are exquisite tourist attractions.
    Covent Garden, Paris Op?ra, Amsterdam are defining the brand to millions and the magnificent settings create an aspirational halo around the products.
    The investment in these extraordinary sites is unequaled by any other retailer I can think of!

         
  • Posted: 03 March 2012 01:32 AM #5

    Champs Elys?es: They’ve been saying since 2001 that they want to have a store there, we’ll see…

    Future store locations that have more or less been confirmed (by job listings / local news etc.):

    Australia: Brisbane, Sydney
    China: Beijing
    USA: Houston, Palo Alto, Santa Monica
    France: Lyon, Paris
    Italy: Rome, Torino
    Germany: Berlin
    Spain: Barcelona, Madrid

         
  • Posted: 05 March 2012 11:33 AM #6

    Photos of a gorgeous new Apple store in Amsterdam

    http://www.flickr.com/photos/ifostore/sets/72157629143777004/

         
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    Posted: 05 March 2012 09:02 PM #7

    Mercel - 05 March 2012 03:33 PM

    Photos of a gorgeous new Apple store in Amsterdam

    http://www.flickr.com/photos/ifostore/sets/72157629143777004/

    Wow, what a beautiful store and one of the biggest in Apple’s chain.  It looks like a combination of the Covent Garden UK and Opera Paris France locations. 

    I would assume the store rumored to open in Sweden will be just as big and stunning.

    Signature

    Tim Cook: iPad is 91% of all tablet web traffic. I don’t know what these other tablets are doing.

         
  • Posted: 28 March 2012 01:37 PM #8

    Apple Retail Store Expansion: What?s keeping Apple from expanding to more markets?

    I have no answer to that question but…continuing a theme from an article in 2008 on Apple Stores primarily being located in a grouping of English language speaking countries (US, UK, Canada and Australia) I looked up more recent numbers hoping to see positive changes.

    1.) 95% to 90%

    Two weeks after Apple announced Ron Johnson’s departure (four and a half months before he actually left employment) and just two weeks before the quarter ended at the end of June 2011 the number of Apple Stores opened totalled 325.

    296 stores were located in English language speaking grouping of stores (US, UK, Canada and Australia)

    This meant that 90% of Apple Stores were located in this English language speaking grouping.

    It was 95% three years ago.

    http://www.macnews.com/content/donovans-views-apple-retail-talk-talk-walk-walk


    2.) So…where Johnson and his team did make an effort outside the US for establishing retail stores, it was primarily made in countries that spoke English language as their predominant official language.

    3.) The lack of execution outside this grouping of English language speaking countries has no doubt “left money on the table” quarter after quarter.

    It probably also resulted in less market share for their products especially their first time buyers of their Macintosh computer products as well as their newer iPads. First time consumers don’t have an Apple Store to walk into and discover what the Macintosh is and buy it. They have to find the local reseller of each of these products or possibly the single national outlet. (The iPhone will at least have the local carriers selling it locally to consumers in their retail operations.)

    I read some journalists, reporters and pundits expressing through tweets, blogs and articles of their impatience and boredom of Tim Cook going over newly Apple Stores in his recent iPad announcement presentation before he went on to announce the new iPad. It seems that they can’t curb their impatience and realize international markets are more important to Apple now and expansion into them is driving their record revenue levels.

    Life does exist outside the US. Every day. And in another language than English and there is money to be made there. May be more money than the US.

    Here is something the pundits and journalists could reflect on: when China sales overcome the US revenue for Apple, will Apple announce their new product will be sold there before being launched in the smaller US market and they have to wait a couple of weeks, a month or three months before their locality gets a launch. Hmm.

    4.) 90% to 57%

    Only 21 stores out of 37 opened stores since the Johnson departure announcement were in the English language speaking grouping of stores (US, UK, Canada and Australia).

    That is 57%. Down from 90%

    The percentage is changing favourably in recent quarters but it still has a way to go to reach something more representative of the source of Apple’s revenue.

    5.) Now the good news

    Gary Allen of the ifoapplestore.com site tweeted this week: “I’ve confirmed 27 future Apple stores opening this year, only 5 in the United States. Another 13 stores undiscovered out there somewhere.”

    His previous postings this month at his site of confirmed future stores are showing only 3 out of 9 to be in the English language grouping or just a third. There is hope.

    Chengdu, Shenzhen (China)
    Berscia Italy
    Valladolid (Spain)
    Hanover Germany
    Stuttgart Germany
    Cologne Germany
    Dijon France

    Yonkers New York
    Sydney Australia
    Perth Australia

    6.) The Englishman John Browett has his work cut out for him and I wish him well in opening 295 stores outside these English language speaking countries.


    From that 16 May 2008 article:

    “Today, Apple is about 50 percent international revenue and about 50 percent in the U.S.,” he [Ron Johnson] said. “We increasingly want to get our retail presence out in the other countries.”

    I calculate that 95 percent of the Apple retail stores operate in areas/markets where the first language is English and that will have to change with any expansion into countries where 100 percent of the population prefer to speak their non-English language. This alone requires more bilingual capabilities in managers and staff just to get a store open for business.

    Most American managers working domestically in the US will not be exposed to working life outside the US borders. The few differences in operating between domestic states, as well as the local society and habits are much less than what they encounter when operating between countries and regions.

    In twenty-five years of living outside the US after being raised a mere 50 miles south of Cupertino for the first twenty four years, I realize the correlation of the lack of international living experience and understanding of differences in markets, society and culture have often led to less than stellar performance by American-based companies (and their managers) operating outside their borders, including those “borders of experience”. A much broader set of skills and viewpoints are required for “better” performance in reaching an increased international retail presence (of so many unique and different countries) and Apple is no exception.

         
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    Posted: 28 March 2012 02:40 PM #9

    An excellent post.  I’d “quote for truth” but its pretty long

         
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    Posted: 28 March 2012 09:49 PM #10

    Very nice post indeed.  I follow the infoapplestore website to try to stay updated on Apple retail expansion…..I’ll have to add Gary on Twitter btw.  Most of these big European store openings this year are “estimated” to open in October, just in time for the holiday push.  The other big store rumored to be opening in Europe is in Stockholm, Sweden.  Apple’s retail expansion is crucial in keeping Mac growth at 20% levels.

    http://www.thelocal.se/39316/20120224/

    Edited to add link.

    [ Edited: 28 March 2012 10:01 PM by afterglow ]

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    Tim Cook: iPad is 91% of all tablet web traffic. I don’t know what these other tablets are doing.

         
  • Posted: 29 March 2012 08:14 AM #11

    goubulibaozi, great post!

    You say you don’t but you seem to have an answer to my question: There’s a language barrier preventing Apple from expanding faster.
    I guess it made sense for Apple to expand to Canada, Australia and the UK first because of the common language and similar culture/laws and then slowly moving towards non-English speaking countries.

    Language isn’t the only barrier though: Currency, supply chain, logistics, hiring and training, local personnel regulations and law, etc. all have to be considered when entering a new country. It’s a slow process but Apple seems to make progress in major European markets like Germany, France, Spain and Italy. I have confidence in their ability to expand into China. Apple also has a self-imposed requirement to build only in the perfect location, which slows them substantially. They only build 40 stores per year…

         
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    Posted: 29 March 2012 10:12 AM #12

    The “world’s largest” Apple flagship store emerges in China.


    http://micgadget.com/24448/security-guards-mess-up-upcoming-worlds-biggest-flagship-apple-store-in-dalian/

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    Tim Cook: iPad is 91% of all tablet web traffic. I don’t know what these other tablets are doing.

         
  • Posted: 29 March 2012 11:16 AM #13

    There’s no question Apple has an opportunity with store expansion.  But what’s not being mentioned here is that Apple is still ramping production to meet the demand.  Apple can sell all it produces, so the limiting factor is less about retail presence than production. 

    Tim Cook is on it.

         
  • Posted: 29 March 2012 11:20 AM #14

    As an aside but related to retail, I saw a very odd phenomena at Microsoft retail two nights ago.

    They had a line of customers.  Yes, no kidding.  Now, I know the Lumia 900 launches in April, and that’s no guarantee of a line anyway.  So my curiosity was piqued.  What was MS selling that queued a line?

    Uh, they were giving away free phones.  LOL

         
  • Posted: 31 March 2012 07:58 AM #15

    Mercel - 29 March 2012 02:16 PM

    There’s no question Apple has an opportunity with store expansion.  But what’s not being mentioned here is that Apple is still ramping production to meet the demand.  Apple can sell all it produces, so the limiting factor is less about retail presence than production. 

    Tim Cook is on it.

    That might be true for iPhone but it seems like iPad production has improved significantly from last year and production doesn’t seem to be as much of an issue anymore. It certainly can’t be an issue in the Mac business, where retail is really important (50%+ of customers in their stores are new to the Mac).

    I think Apple Stores, whilst extremely profitable, mainly serve the purpose of rolling out/presenting new products that customers need to see/try first before they decide to buy them.

    With that being said, there is something going on at Foxconn at the moment that can have a negative impact on production (and manufacturing costs). From what I understand, employees might only be allowed to work 49 hours a week going forward, basically eliminating the well-paid (150%-300%) overtime hours. That’s not how China works: Those employees originate from very poor rural areas such as Sichuan, Henan, Hunan etc. and their goal is to earn enough money to send home to their families. They actually live inside the factory area and don’t have a clue what to do with their new spare time, all they want is to make as much money as possible. I am absolutely certain they will not welcome this change.