“‘Sorry Steve, Here’s Why Apple Stores Won’t Work,’ BusinessWeek wrote with great certainty in 2001. ‘It’s desperation time in Cupertino, Calif.,’ opined TheStreet.com. ‘I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake,’ predicted retail consultant David Goldstein,” Jerry Useem reports for Fortune Magazine.
MacDailyNews Take: We love that Goldstein quote. It’s one of our all-time favorite moron quotes. Sorry, “retail consultant.” Who the hell was Jerry’s guidance counselor, the Marquis de Sade?
Useem continues, “Yet five years later, at 4:15 A.M., a light flickered on. Onlookers were bathed in the milky-white glow of the Apple logo, suspended in a freestanding cube of glass at the corner of Fifth Avenue and Central Park South in Manhattan. Dazzling in clarity and 32 feet on a side, the structure was likened variously to a temple, the Louvre Pyramid, Apple’s G4 ‘Cube’ computer, a giant button, and even – in the words of NBC’s Brian Williams – Steve Jobs’ Model T. But it was, everyone could agree, manifestly a store.”
“‘People haven’t been willing to invest this much time and money or engineering in a store before,’ says the Apple CEO, his feet propped on Apple’s boardroom table in Cupertino. ‘It’s not important if the customer knows that. They just feel it. They feel something’s a little different,'” Useem reports.
Useem reports, “And not just the architecture. Saks, whose flagship is down the street, generates sales of $362 per square foot a year. Best Buy stores turn $930 – tops for electronics retailers – while Tiffany & Co. takes in $2,666. Audrey Hepburn liked Tiffany’s for breakfast. But at $4,032, Apple is eating everyone’s lunch.”
“That astonishing number, from a Sanford C. Bernstein report, is merely the average of Apple’s 174 stores, which attract 13,800 visitors a week. (The Fifth Avenue store averages 50,000-plus.) In 2004, Apple reached $1 billion in annual sales faster than any retailer in history; last year, sales reached $1 billion a quarter. And now comes the next, if not must-have, then must-see, product,” Useem reports.
“‘Our stores were conceived and built for this moment in time – to roll out iPhone,’ says Jobs, summoning one to the table with a tantalizing I’ve-got-the-future-in-my-pocket twinkle. If sales are anywhere near expectations – Apple hopes to move ten million iPhones in 2008 – the typical Apple Store could be selling, in absolute terms, as much as a Best Buy, and with just a fraction of the selling space,” Useem reports.
Full article here.
MacDailyNews Note: Apple retail Store locations and info here.
Boy you have to laugh when you remember back to when the first stores opened and all the analysts said it was a huge boondoggle and would lose Apple tons of cash….
Hindsight sure is better, huh guys??
Wow, I knew they were successful, but I had no idea.
Cool Google mashup of Apple stores.
http://www.freemacblog.com/applestores/
Retail differently. What a great story!
So if Apple has iPods, iPhones and AppleTVs to sell in its stores, that will free it up to license OS X, right? (which it can also sell in its stores, along with iLife and the pro apps)
Yes, ’tis true! But working any retail really, really sucks ass!
What’t the big deal? You can get a computer at Wal Mart.
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(my apologies in advance to the new moderator)
I’ve just recently set up my own online small business and from day 1, I took my business cues from Apple. The bank manager said my presentation and business plans were far above what most people put before her and feedback from potential customers mirrors that view.
One day, someone will write a book on how to set up and run a business the Apple way. It’ll sell a million.
Dirty PlP
Did you use the iLaunch?
John Scully, eat your hat
Small stores plus high priced items = high sales per sq. ft.
I bet if you look at the average price of items in other stores the price per item is much lower than what is stocked in an Apple store.
Guess the workers at the Apple stores deserve a raise… (What´s the ave salary of an Apple worker vs. the other stores mentioned in the article?)
Real World
You forgot to add sales to your equation.
Small stores+high prices(sales)=sq.ft.$
MDN: “Who the hell was Jerry’s guidance counselor, the Marquis de Sade?”
Aw, fsck. I just did a Diet Coke spit take all over my keyboard!
You owe me yet another keyboard, MDN.
I wonder what has become of the retail consultant seer known as David Goldstein?
If he’s still a retail consultant he then needs to be reminded of his error.
Having been watching Apple closely since 1997, stories like this really bring back the memories of all the doomsayers– like MacObserver’s Apple death knell. These are fun times and things continue to get better.
Can’t till iPhone and new stuff lands.
REAL WORLD
yes the computers are high priced items. but MOST of the items are between $20-$30 (ipod cases/headphones/etc). A high percentage of volume comes from those little add ons per sale.
I wonder what walmart does per foot per year. Is there of list of all of the major stores that shows sales per foot per year?
Apple should cordially invite David Goldstein to each and every new Apple Store opening from now on.
Real World has it at least partly right. But it isn’t the size of the stores or the price of the items so much as the profit margin on those items. Apple’s profit margins have been admirable even in years when sales have been shrinking. Now? Glorious. Even so, less than Dell, H-P or Gateway ask for similarly-priced products. 20%+ top-to-bottom isn’t in the same class as -1% at the bottom through 30%+ at the top. Especially when you are selling many more systems at the -1% profit margin. Gaining revenue and earning profit are not quite the same things – profit is better.
DLMeyer – the Voice of G.L.Horton’s Stage Page
“I wonder what has become of the retail consultant seer known as David Goldstein?
If he’s still a retail consultant he then needs to be reminded of his error.”
This looks to be him:
http://www.gic.net/dg.html
BTW, the page doesn’t format correctly in Safari. 8^)
thekilldare—- yeah, sure, most items in the apple store are in the $20-$30 range…LOL.
That´s how Apple is getting $4,000 per sq. ft. Selling thousands of $20 ipod cables.
Guess you have been shopping in a different Apple Store than me.
(I know there are a few 3rd party add-on products in the Apples store. The number of Apple brand product in the $20-$30 range you can count on one hand…before taxes that is…..)
The original article is a really good read!
When is Apple going to open one here in Berlin? There are about half a dozen in my home country, Britain, but none on the continent.
The European Apple-freaks are waiting impatiently in:-
Amsterdam
Athens
Barcelona
Berlin
Brussels
Bonn
Cologne
Lisbon
Lyons
Paris
Prague
Rome
Milan
Madrid
Warsaw
etc.
etc.
DLeyer: “….so much as the profit margin on those items.”
The article talks about sales per sq. ft., not profit margins. RealWorld is right: Small stores+high priced sales= High $$$ per sq. ft.
Bet a Ferrari dealership has a higher $$$ per sq. ft. than a Ford dealer.
Toby – right on. Apple has the worst Marketing Dept. in the largest potential market – Europe.
More people in Europe than USA. For example, Germany has over 90,000,000 people in a size of the state of Oregon and there is not one Apple store!
Imagine having 1/3 of the population of the US in Oregon and not have one Apple store. Amazingly bad business sense by Apple Europe.
Article read… “Saks, whose flagship is down the street, generates sales of $362 per square foot a year. Best Buy (Charts) stores turn $930 – tops for electronics retailers – while Tiffany & Co. (Charts) takes in $2,666. Audrey Hepburn liked Tiffany’s for breakfast. But at $4,032, Apple is eating everyone’s lunch.
Go Apple!
“BusinessWeek wrote with great certainty in 2001. “It’s desperation time in Cupertino, Calif.,” opined TheStreet.com. “I give [Apple] two years before they’re turning out the lights on a very painful and expensive mistake,” predicted retail consultant David Goldstein.”
MUWHA-HA-HA-HA-HA!
MDN Word; account, as in, Mr. Goldstein, can you account for your words?
Yes, 20/20 hindsight is a beautiful thing. And since none of us put our opinions in writing, we can feel free to make fun of those that did. Let’s give the guy a break and just enjoy the fact that the experts do not, in fact, know it all.
I believe that I thought the idea of opening retail stores was a bad idea. To be fair, I didn’t give it that much thought. It was just my initial reaction.