Apple Retail Stores: Macintosh Sales Centers And More

  • Posted: 07 February 2011 03:00 AM #16

    Tetrachloride - 07 February 2011 02:24 AM

    That’s a key point.  The Apple Stores are needed to sell Macs more than the iDevices.

    Here’s some interesting data on retail store revenue growth versus the company as a whole since the release of the Apple iPad:

                  Stores         Apple
    FQ3 ‘10     73%            61%
    FQ4 ‘10     75%            67%
    FQ1 ‘11     95%            71%

  • Posted: 07 February 2011 07:16 AM #17

    Once you’ve achieved the highest $/sf sales in all retail, how fast can you grow. You can only expect so much from a horse, and after he’s won all the races…............

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    Posted: 07 February 2011 01:19 PM #18

    danthemason - 07 February 2011 11:16 AM

    Once you’ve achieved the highest $/sf sales in all retail, how fast can you grow. You can only expect so much from a horse, and after he’s won all the races…............

    I guess we can call Apple buy a new name then. Secretariat. The symbolism is there along with outcomes coinciding with Apple’s performance.

    Disclosure: watched the movie over the weekend, I thought it was good.

    The ipad race is eerily similar to The Belmont.


    Adversity does not just build character, it reveals it.

  • Posted: 07 February 2011 01:22 PM #19

    adamthompson3232 - 07 February 2011 07:38 AM
    DawnTreader - 07 February 2011 07:00 AM
    Tetrachloride - 07 February 2011 02:24 AM

    That’s a key point.  The Apple Stores are needed to sell Macs more than the iDevices.

    Here’s some interesting data on retail store revenue growth versus the company as a whole since the release of the Apple iPad:

                  Stores         Apple
    FQ3 ‘10     73%            61%
    FQ4 ‘10     75%            67%
    FQ1 ‘11     95%            71%

    This is interesting but I suspect same store sales growth actually trails apple’s total revenue growth. I think this is due to several factors:

    1. International sales growth ramping with iPhone carrier expansion which outpaces store revenue growth.

    2. More domestic and international retail partners for various product lines.

    3. A shift toward online sales (see’s revenue growth) from traditional brick and mortar stores across all industries.

    Yes, the stores are awesome and definitely help drive apple’s growth but I don’t think their growth is keepin pace with total revenue growth, at least not in terms of same stores.

    Retail store revenue as a percent of total revenue hit a high point in the September quarter. Retail store revenue as a percent of total revenue.

    The FQ1 seasonal drop in the retail store segment’s contribution to total revenue was expected. Moving forward with more store openings and rising foot traffic and sales, the stores also contribute a retail margin benefit to the net income line.

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    Posted: 07 February 2011 01:37 PM #20

    Some rambling thoughts

    I remember going into a Westworld Apple product store with my dad to purchase an iMac. The only other presence was vacuuming. I remember stepping out of his way so he could vacuum where we were standing. It seemed a long time before he finished. He gathered up his equipment and took it to the store room. It was some time before he returned so we could gather the information to make our purchase. I remember always feeling lonely in those old stores.

    In the giant computer stores Apple products were displayed at some back corner. Sometimes there was someone conversant in Apple; on his days off, someone else would pitch hit.

    I thought it quite a practical move when Steve said he was opening Apple stores. The large computer stores where closing down, purchasing directly from Dell over the internet and by phone seemed to be the way of commerce for established popular computer companies. Steve explained that back corners were not working. It was not the best days for Apple.

    Usually it is necessity that is the drive to innovation and sometimes innovation is reinventing the past or tweaking it. Apple was blasted in the press with references to barn doors and horses. With hindsight, it seems so simple, the route taken by Apple.

    I suspect Apple is right with its plan for more stores. In my town, there are two Apple Stores to serve a population of something north of a million people; there are four stores in total for my province. These stores make up 21% of the nation?s Apple Stores in a province that has 9% of the nations people.  There is no room to feel lonely in the Apple Stores of today. To my experience, the US, GB, Australia seem to share the same experience. There is room to grow as the population of new comers to the Apple experience take the bold step into Apple?s brave new world. There won?t be any time for vacuuming in the daylight hours.

    Smart phones will soon overtake the mobile market. The iProducts are simple and elegant in design. They do as described and advertised. It seems so simple. The iPhone and iPad will probably follow the trail blazed by the iPod.

    It looks very likely the Apple trail is the highway that Apple can ride for some time. Yesterday I saw the Xoom advert but I didn?t see the Xoom. I saw desperation. Some things are so obvious. Life is more impatient today. It?s a tiny minority who want to tinker and tweak and wait for things to get better. The majority don?t have the patience for promises and sometime soon.


    Know History; not just your Folklore! At least until I find time to rewrite the laws of physics.

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    Posted: 07 February 2011 04:28 PM #21

    Retail software to go away ?  Downloads only ?

    If I can redownload stuff and transfer a license from one Mac to another, especially when my other Mac is dead, would be nice.  I doubt Apple is that sophisticated for my ideal wish.

  • Posted: 07 February 2011 05:19 PM #22

    Here’s an article from 2001 explaining, well, the title says it all.

    Sorry, Steve: Here’s Why Apple Stores Won’t Work
    New retail outlets aren’t going to fix Apple’s sales

    MAY 21, 2001
    By Cliff Edwards

    Now that we have the advantage of 20/20 hindsight, the entire article makes for quite an amusing read. I’ve excerpted a few snippets. Pay particular attention to the unsolicited advice given in the last paragraph. The irony is priceless.

    The way Jobs sees it, the stores look to be a sure thing. But even if they attain a measure of success, few outsiders think new stores, no matter how well-conceived, will get Apple back on the hot-growth path.

    “Apple’s problem is it still believes the way to grow is serving caviar in a world that seems pretty content with cheese and crackers,” gripes former Chief Financial Officer Joseph Graziano.

    Rather than unveil a Velveeta Mac, Jobs thinks he can do a better job than experienced retailers at moving the beluga. Problem is, the numbers don’t add up. Given the decision to set up shop in high-rent districts in Manhattan, Boston, Chicago, and Jobs’s hometown of Palo Alto, Calif., the leases for Apple’s stores could cost $1.2 million a year each, says David A. Goldstein, president of researcher Channel Marketing Corp. Since PC retailing gross margins are normally 10% or less, Apple would have to sell $12 million a year per store to pay for the space. Gateway does about $8 million annually at each of its Country Stores. Then there’s the cost of construction, hiring experienced staff. “I give them two years before they’re turning out the lights on a very painful and expensive mistake,” says Goldstein.

    Indeed, rather than taking on the retailers who ought to be its partners, Apple would do better improving how it works with them. A good step would be to end the “think secret” approach that shrouds every new-product announcement. Covert operations worked beautifully when Jobs first arrived on the scene; his charismatic stage presence and Apple’s eye-popping designs created priceless buzz. Now, retailers complain that the secrecy prevents them from doing advance advertising to hype sales and clear out inventory. “They are the most secretive company I’ve ever done business with,” says one top retailer. “They should let the news leak out, to convince the world how exciting their stuff is. That’s how everyone else does it.” Maybe it’s time Steve Jobs stopped thinking quite so differently.

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    Posted: 07 February 2011 05:35 PM #23

    Goldstein and “top retailer” criticisms are on entirely different planes.    TR wanted more exposure, mainly in PR.  Goldstein wanted Apple to be safe—don’t invest.

    Gateway was an experienced retailer ?  How that XP stuff go anyway.  Yes, it sold millions.  It also helped sell millions of Macs.  Gateway could not fix MS problems.

    Secret stuff ?  Think Secret, MacRumors and some investigative Wall Street analysts, not to mention crystal balls and tea leaves, and finally announcements leaks from Apple top management have given us quite a bit of information.

  • Posted: 07 February 2011 05:59 PM #24

    Back on topic.  grin

    I’m expecting a similar rate of retail sales growth this calendar quarter and as more store open internationally, the pace of revenue growth may be sustained through the entire fiscal year, besting Apple’s overall revenue growth and increasing the benefit of the retail margin the stores provide to the bottom line.

  • Posted: 08 February 2011 02:51 AM #25

    In developing my 12-month price targets I’m seeing more and more the importance of Mac unit sales and the expansion of the retail store presence as essential in maintaining consistently strong revenue and earnings growth.

    In all, I think it’s a lack of the market’s confidence in Apple’s ability to sustain growth at anywhere hear today’s rates that are negatively impacting the share price. But I see continued strong growth well into FY2012 and the retail stores are an integral part of the sustained growth picture.

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    Posted: 08 February 2011 11:29 AM #26

    France getting at least 2 Apple Stores


    Manhattan may get its fifth store before Brooklyn gets its first.  Anybody on the East Coast want to fill the rest of us in ?

    [ Edited: 08 February 2011 11:31 AM by Tetrachloride ]      
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    Posted: 08 February 2011 11:55 AM #27

    Tetra, what I find amazing in that article is that the Fifth Avenue store out sells the other three stores combined. Good grief.  :drool:


    Adversity does not just build character, it reveals it.

  • Posted: 08 February 2011 12:08 PM #28

    In order to bring the people to the stores the stores have to brought to the people. This is why lesser trafficked and less expensive retail locations just don’t work. Obviously large population centers and a number of upscale suburban mall locations tend to work for Apple.

  • Posted: 08 February 2011 12:09 PM #29

    DawnTreader - 05 February 2011 09:12 PM

    My latest missive at Eventide.

    Snippet: There’s no mistaking the importance of Apple’s retail stores to the company’s continuing growth in revenue and earnings and the ongoing growth in Mac unit sales. In the September quarter retail store revenue rose 75% versus the 66.7% rise in revenue for the company as a whole. The 95% rise in retail store revenue in the December versus the 70.5% rise in overall revenue suggests there is capacity for more retail stores as the company’s global product presence continues to expand.

    The Apple retail stores are key to the company’s continuing growth in revenue and earnings and there’s definite global capacity for more retail store locations.

    I’m bringing the original post back for page 3.

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    Posted: 08 February 2011 09:28 PM #30

    Apple’s Special Weapon In Its iPad War Against Google

    As Apple starts to see iPad competition from the likes of Google’s Android partners, it has one unique asset that its rivals don’t: Its retail empire, which includes more than 320 stores in 11 countries…it would be hard to argue that Apple stores are not a huge competitive advantage in these early days of the tablet industry.

    It’s difficult to affix a dollar value to what the retail stores add to the Apple brand. The unique locations & architectural designs give Apple an aura of quality and style. I think people sense this is no ordinary store and the products inside must also be special - enough to command a premium price.

    For the more practical consumer, the fact that you can bring any Apple product in for warranty service and speak to a real-life person must be reassuring in this era of faceless, off-shore service representatives.

    Finally, I think Apple’s “One to One” training program and the summertime “Apple Camp” for kids are simply brilliant. I’m guessing they probably run these at break-even rates, but the goodwill they develop is priceless. The intent is to keep a customer for life rather than make a quick buck from them.

    I have a cousin in Washington state. She’s a life-long PC user and a longtime MSFT shareholder. Her husband gave her a 1st gen iPod nano for her birthday in 2005 and the battery started to fade severely last year. So she brought it into an Apple Store to see what it would cost to replace the battery. grin The “genius” patiently told her the cost, but also mentioned that she would get a 10% trade-in discount (for a 5 yr. old product!) if she bought a new Nano.

    Long story, but a few months later she had a new Nano and a new iMac. She signed up for “One to One” and has taken more than a dozen sessions to learn everything from basic Mac skills to more advanced iPhoto techniques. I doubt she’ll ever buy another PC.