Apple Retail Slows Growth, Cuts Employees

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."