“According to conventional wisdom, Apple’s resurgence is due almost entirely to the popularity of the iPod. But the company’s success lately may have as much to do with something more prosaic: Apple’s rapidly expanding chain of retail stores,” Troy Wolverton writes for TheStreet.com. “The stores have given Apple the chance to showcase its products, and not only the iPod but also its line of Macintosh computers. The stores may be a significant reason Apple has gained share in the computer market.”
“But if the stores have boosted short-term sales, they may weigh on long-term results. That’s because retail-chain growth inevitably tends to slow as stores age,” Wolverton writes. “Apple’s stores are still relatively young on the whole, but that likely will change in coming years as future store count slows.”
“People have had their doubts about Apple’s stores from the onset, something that inevitably drew comparisons to Gateway’s failed store effort. Gateway closed its retail division last year as part of an effort to cut costs. In contrast, Apple went in the other direction, as the company showed again last month when it reported second-quarter earnings. In the most recent quarter, Apple’s retail division garnered $555 million in sales, up 106% from the same period a year earlier and far outpacing the company’s overall sales growth… the stores not only have opened new channels for Apple’s products, they’ve also acted as a billboard for the company, extending its brand. Further, they’ve given customers a chance to test the company’s products, an important factor, particularly in the computer arena, because Apple’s wares are so distinct from those of its competitors.”
Full article here.
If you go to an Apple Retail Store and stick around for awhile listening to customers questions, a surprising amount are Windows-only users with many questions. Clearly, the Apple retail effort is a very important factor in expanding the Mac platform’s user base.
The Apple stores are the ‘windows’ to the world.
…as I mentioned before, keep an eye on this Troy guy… He has many agenda’s
The Genius Bar was better when the stores open. There seemed to be better, more enthusiastic service and the wait to see one was not as long. I think it has deteriorated to simply a front for the repair department. The geniuses also seem more worn out than before, I live near a nest of several Apple Stores so this does not apply to just one store. And, of course, the staff there is still not well paid, not that the pay would be beter at most other retail stores.
Overall, I do always like going into one of the stores and so think it was an important move that Apple made. But, as other places, there was a more excited feel among the staffs there when they first opened.
… agenda’s that usually have a lot to do with the dayprice of APPL stock.
Nothing like hands on before you buy. Apple does it better than anyone else. All of the display models are in perfect working order. All have software on them that you can try out and they are all connected to the internet. Plus Apple stores are always neat and organized without the clutter of the electronic stores.
Like all other retail, Apple gives lots of hype and Disney-esque go-team-go to the new store’s staff, but once established (6 months or so), the new-born glow fades and the staff may feel ignored by the company. With a sales staff of mostly part-timers making no commission and locally average retail wages, the staff has little motivation. I see this in their older stores. The staff is somewhat listless. Although Apple’s rapid retail growth offers opportunities for advancement, the average part-timer cannot afford to move to across the country (or globe) get that new assistant managers position. Apple should try harder to make their existing staff feel valuable; I miss the smiles and contagious energy the staff had a year ago.
This article is par for the course for “Troy”–if you sit back and think about it for a minute, it is REALLY, REALLY STUPID.
Here’s a sample that captures the flavor:
“Should iPod sales cool, the company will need to find another hit product despite how hot its retail stores have become.”
Well, DUH!!!
Another, but a little more subtle, example is when he (repeatedly) quotes the stock industry wisdom that retail growth usually slows eventually, without discussing WHY or whether this would occur in the case of Apple. At its most simplistic, yeah fast-growing traditional retail companies usually slow down because even the best EVENTUALLY saturate the market, or they make other mistakes that damage the company. Well, SO WHAT?? Apple is not your average retail company (it is vertically integrated, selling its own products mainly). There are numerous other growth opportunities for Apple if they saturate the retail market–even then, the Apple stores help Apple sell a lot of product even when customers don’t buy directly from the stores, because they give consumers a chance to experience the product.
Troy is the type of analyst that gives the industry a bad reputation, what a waste space. Maybe he could be employed more productively as a car mechanic, or a street sweeper?
P.S. Buonarroti makes a good point–not that his experience is true at all stores, but it is definitely something to guard against.
Apple Store Shibuya Opening this Saturday!
Hg Wells, I read somewhere that Geniuses can pull in around 50 grand depending where the store is located. That’s not too shabby.
“If you go to an Apple Retail Store and stick around for awhile listening to customers questions, a surprising amount are Windows-only users with many questions. Clearly, the Apple retail effort is a very important factor in expanding the Mac platform’s user base.”
I was one of those Windows people 6 months ago… I used Macs in the late eighties and even bought one of my own in the early nineties, but a job opportunity as a CNE cropped up and I ended up going down the Windows path for over a decade. After getting an MCSe, working as a Windows network “expert” for a few years, I got a job with a dot-com and shifted from corporate network support to the website, which was linux based… After a takeover, I got laid off, and went into freelance web design… I needed to use Photoshop and other such apps, and since I had a PC, I simply dual-booted into Windows… but haed it… god, I hated it! So damn unstable, and the explosion in exploits over the last 18 months pushed me over the edge… I got sick and tired of reformatting, reinstalling XP, and all those apps every 3-6 months!!! It took me a whole goddam day to do!.
So, I was walking in the mall, and saw the new Apple store and walked in… asked a ton of questions, watched a bunch of demos, played with the computers, and finally, $12,000 on my MasterCard later, I walked out, followed by two salespeople gleefully pulling carts loaded with a brand new PowerMac packed with everything (hold the pickles), 30″ cinema display, multipurpose printer/scanner/fax/copier/answering machine/hyperdimensional transporter (I can’t get the last part to work though), and a pile of software… and I was was carrying a 60GB Ipod Photo…
That was in January… I removed Windows from my PC… rebuilt it as a linux web server, and a couple weeks later, after setting up the Mac to do everything it can do, forgot about it. It’s still in the other room, but it’s all dusty now!
I’ve built three web sites since then and have paid off the credit card, so ALL IS GOOD!
Thank you for saving me Apple!
Thank you for readin… I feel the urge to go buy a Mighty Mouse now…
I don’t think the uptick in Mac sales is due to any one factor. It’s a combination; sort of a critical mass. Yes, there’s an iPod halo effect. Yes, Apple Stores are a factor. Yes, Windoze malware another. The superiority of MacOS X another. Etc.
As a shareholder (was) I was enthusiastic about Apple’s retail store concept because the presentation of Apple products in various chains was absolutely awful, not to mention the sales staff having no knowledge or interest. The bulk of the public do not understand computers and most are unlikely to understand what software is available for the Mac, so by having it all in one place with staff who know something about the product AND ARE NOT GETTING SPIFFs for selling OTHER BRANDS, it was hard to understand why Apple did not already have its own stores. Living in Ottawa I have never been in one, but I have been a Mac guy since ’86, and the webstore is good enough for me. But the average user needs to be able to see the product line first hand before he is going to even think about switching.
Finally, newspaper ads work for Dell’s webstore: Apple could afford the odd newspaper insert showing off its OS and its Mac line plus even MS Office for Mac (Windows users would be surprised to know it exists) for those cities of size that ain’t got no Apple Stores….
Clearly, the Apple retail effort is a very important factor in expanding the Mac platform’s user base.
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Clearly the PC retail effort/ignorance is a very important factor in the Mac’s previously shrinking user base.
Troy Wolverton is always trying to rain on Apple’s parade to justify his negative outlook for the company. Yes, it’s true that Apple’s retail business as been a great contributor to the bottom line, but what’s with all these negative outlook talk?
I’m surprised that Troy didn’t point out the fact that the Apple stores are brining in more than $4000 of revenue per square foot. That number has gone up over the years (I think when the Apple Stores first opened, they were doing around $2000 per square foot).
What that means, in plain English, is that Apple Stores are making more money because each existing store has been doing substantially more business over time. It isn’t just about store expansion, which was what led to Gateway’s downfall.
As usual, the analyst muffs it up again.
This past weekend in Georgia was a “tax free weekend”, covering computers & accessories as well as clothing and school supplies. I walked around the mall where an Apple Store is located. There was a line, just to get in the store! No other retail store in the mall had this kind of traffic. Average people were peering in the windows of the store, trying to figure out what all the excitement was about.
Even when I don’t need anything, and there’s nothing “new” to look at, I still find myself walking into the Apple Store (and too often walking out with items I didn’t really NEED). Few other stores have this kind of draw for me.