Apple’s Fifth Avenue Mecca could easily do $40 million in annual sales

“It’s a great space that Apple Computer has picked for its latest Manhattan retail store. The underground concourse outside the General Motors building has never been anything special. As far as retail properties go, the building itself is perhaps best known as the home of the big toy store FAO Schwartz, and more recently as the outdoor studio of The Early Show on CBS,” Arik Hesseldahl reports for BusinessWeek. “But now the big glass cube that marks the entryway to the Apple store underground is what steals the show (see BW Online, 5/18/06, “Apple’s New Store Is Pure Glass”). But then again, Apple is used to one-upping the competition, visually and otherwise.”

“Apple is opening what’s likely to be considered its flagship store on May 19, the fifth anniversary of the announcement of plans to build a retail business. The timing hits home the message that Apple’s strategy — much criticized at the outset — has been a success. Retail stores last year accounted for about 17% of sales, and consumers picked up some 609,000 Macs at retail stores around the world, to say nothing of iPods,” Hesseldahl reports. “My hunch is that the proportion of total sales will grow as the result of this store alone. Consider this: Apple retail stores generate about $4,000 per square foot per year, said Ron Johnson, the Apple senior vice-president in charge of the retail operation, in remarks on the morning of the opening. This new store boasts 10,000 square feet, which suggests about $40 million in sales per year is an easily attainable goal.”

Hesseldahl reports, “As it turns out… products like the iPod cost more overseas. If you live in Buenos Aires and plan a trip to New York, why bother paying as much as $592 for an iPod nano you can pick up in the Big Apple for $249? Tourists from overseas can’t help but be an important calculation for the location of this store. And I’m not the only one who thinks so. I ran into Charles Wolf, analyst at Needham & Co., who lives near the store, and has been walking by it every day for months as the construction work progressed. “What’s going to make this store is the international crowd,” he says. Considering the dollar’s weakness against the euro, ‘the Europeans will be coming in here and not just buying one computer, they’ll be buying dozens. That to me is the real secret to this store. Apple can talk about reaching the people who live on Manhattan’s Upper East Side, but it’s the international tourists who are really going to make this store go.'”

Full article here.
[Thanks to MacDailyNews Reader “Peter G.” for the heads up.]

Related articles:
As fans line up for Apple’s flagship Fifth Avenue retail store, a third NYC store is in the works – May 19, 2006
Sneak peak into Apple’s flagship Fifth Avenue Retail Store – May 18, 2006
Extraordinary Apple Store Fifth Avenue to open on Friday, May 19 (with photos) – May 18, 2006
Apple’s Fifth Avenue ‘Glass Cube’ store to test several retail innovations – May 17, 2006
Mac users to converge on NYC; plan overnight sidewalk camp for opening of Apple Store Fifth Avenue – May 13, 2006
Apple starts online countdown to Apple Store Fifth Avenue ‘Glass Cube’ Grand Opening – May 11, 2006
Apple CEO Steve Jobs may visit New York City to cut ribbon on glass cube – May 04, 2006
Apple’s Fifth Avenue ‘Glass Cube’ retail store grand opening on May 6 in New York City – April 27, 2006
32-foot-by-32-foot glass cube-topped Midtown Manhattan Apple ‘Mecca’ to serve the faithful 24/7? – April 18, 2006
Photos of Apple’s $9 million 32-foot-by-32-foot New York City Glass Cube – January 01, 2006
Steve Jobs to eventually take his NYC big glass cube with him – December 02, 2005
Glass cube assembly begins at site of Apple’s 25,000-square-foot 5th Avenue flagship store – October 28, 2005
RUMOR: Apple Store coming to Midtown Manhattan beneath transparent glass cube – March 04, 2005

23 Comments

  1. Good one Ka-Ching!

    Yes Tom, I am sure the Japanese keyboard looks the same as the US keyboard on a Mac Book and the same with the other languages. That US keyboard is going to be real helpful when the computer owner gets back to his homeland. And then try to sell it a few years later…..

    Hey, Tom, expand your mind…visit another country. P.S. Taco Bell is not another country.

  2. For the great photos. Saved me bundles of money otherwise to be spent on airplane tickets and hotel room.

    There’s nothing in this store I can’t buy in the one down the street.

    What am I missing? Why all the hysteria?

  3. why do these apple places just remind me of Nordstroms?
    yuppie guppie crap.
    And a giant glass cube as the entrance to a ho-um inside store????
    all the profit is going to be ate up in window washing costs.

  4. Queezzie:

    Don’t want to rain on your parade, but I lived in France [’til moving to NYC in ’03] and bought a PowerBook G4 in 2002 from Tekserve. I took it back to Toulouse with me.

    You know what? My local Apple store in Toulouse sold French keyboards…. and they’re almost as cheap as here [ie. $6.00]. How about that…?? Check out here [ http://daystar-store.com/index.asp?PageAction=VIEWPROD&ProdID=532 ] if you doubt it.

    I saved over $900 by buying in New York. That’s $900! Made perfect sense to me… and when I moved to New York the next year, I simply swapped out the French keyboard and replaced it with the English one.

    So yes…. tourists WILL come here from all over Europe and buy Apple kit – especially laptops.

  5. ” Consider this: Apple retail stores generate about $4,000 per square foot per year, said Ron Johnson, the Apple senior vice-president in charge of the retail operation, in remarks on the morning of the opening.”

    Damn! These guys really do analyze every single detail don’t they? Hmmmmm……I’m going to see if I can open a 10′ x 10′ Apple store in my area – should be able to gross $400,000/yr. Not too shabby for a store that can only have 2 people in it at a time after putting in the Genius Bar, iPod Bar, and merch displays – and one of those two people will be an employee! ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

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