“‘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.
Falkirk,
well put. We shouldn’t gloat.
I had the same feeling when the iPod came out.
go apple, indeed!
somewhat ironically linked to the above posters name, someone handed me a IIci last week. cute old box. has an 040 accelerator in it! =)
It’s not unreasonable for them to have predicted the stores would fail. Excellence in product design and marketing doesn’t necessarily translate to retail success. Their predictions were bad but that doesn’t make them bad analysts or stupid people. Lots of people, writers and fans, predicted that the move to Intel was a horrible mistake.
Anyone who isn’t sometimes wrong is playing it too safe.
Portland, Oregon is Macintosh crazy here, with three Apple Stores, as well as half a dozen third party Macintosh dealerships, all of them have big crowds of customers in their stores.
I don’t think that it’s the Apple Stores themselves, it’s what they’ve got to sell that people are crazy for.
–Rick
We’ll have a store so good that Apple will have to close all their stores and give them back to the malls!
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.
Apple Europe? Think again. Store worldwide locations are decided in Cupertino. Apple Europe has no final word on whether a store in Berlin, Rome, etc has to come before Paris, Texas.
@Real World
“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 you’ve never actually been to Tiffany’s then…
TowerTone: Can you get free tech support and creative support at WalMart? Can you play with a video camera connected to a computer in Wal Mart and even edit your own movie? Apple employees will hand you a blank DVD on request so you can burn a project right there in the store – even if it ties up that machine for an hour.
RealWorld: Depending on location, retail employees can earn $12-18 per hour, more for managers. And Mac Geniuses can earn from $18-26 per hour. And that’s not counting quarterly bonuses, stock options (1-10% of pay with matching funds), health and retirement plans, vacation, etc…
Apple does sell expensive products, but they have high volume. Compare Apple to Best Buy or any HDTV retailer. Or to the Sony Style stores, which are smaller than most Apple stores and sell cameras, computers, TVs, but don’t earn anywhere near the same $$ per square foot.
Malthus – Tiffany store is much, much, much larger than appple store. And they got some “low” priced trinkets in there.
I bet the Tiffany store in New York does, in total, lots more business than the apple store.
Did a sales job today in a ghastly PCWorld — tasty lady looking at the Macs and (of course) no one around to help. Sooo…. a litle knowledge and enthusiasm from me and she’ll be going for an iMac.
But really, PCW did the job for me… crappy hole out of the Charles Dickens school of retailing.
@insider – “Apple Europe? Think again. Store worldwide locations are decided in Cupertino. Apple Europe has no final word on whether a store in Berlin, Rome, etc has to come before Paris, Texas.”
Apple Europe is worthless.
Apple Cupertino has obviously nary a clue of the European market.
Rudge: –I don’t think that it’s the Apple Stores themselves, it’s what they’ve got to sell that people are crazy for.—
Thanks for stating the obvious.
It´s not the Burger King stores that convince me to eat there, it´s the burgers and other food.
Same with my grocery store, shoe store, car dealer, pharmacy – I usually go for what they are selling inside don´t hang around much admiring the brick wall of my Target, costco or Toyrus or Safeway store.
Notice how the store distribution is focussed around California. Perhaps they should put a retail location manager on each continent. Or give the guy more than a bus pass for travel.
It is a big world, but CFO said Europe was more difficult because of the lack of shopping malls. I find that a poor excuse. Having travelled through Europe and wonderfully impressed with the Regent street location (non mall)in London, I can imagine Apple on the La Rambla in Barcelona, near the DamRak in Amsterdam, Rotterdam has good locations, obviously the Parisian street is obvious, Koln, Metzingen, Frankfurt, would be substantial. A bit of a shopping area near the Spanish steps in Rome, the streets of Firenze, the canals of Venice…do we need more American stores as the next priority? Can go on and on…but seriously..get some stores in unserved Metors before building the 2nd and 3rd stores in cities.
As a selfconfirmed lousy analyst at most things retail, it would still seem money better spent outside the continental US for every new store. 3 in Toronto, none in Vancouver?
We all love the product…make it accessible.
“Bet a Ferrari dealership has a higher $$$ per sq. ft. than a Ford dealer.”
I’d love to see the figures on this. Perhaps it is true, but I’m sure a Ford dealer has many more sales than a BMW dealer. So I wonder.
Le,
Don’t forget Michael Spindler and Jean Lous Gassee’ came from Apple Europe. It hasn’t been a total loss. Well, in terms of entertainment value, at least!
I live in Mexico, my daughter is a student at University of Miami. On a recent trip to the States, I purposely chose a flight with a 7 hour lay over in Miami , to spend the afternoon with Nicki.
She asked what we wanted to do, I asked that we visit an Apple store (never had seen one) and then have a nice lunch on the water.
It was beyond my wildest expectations, I felt like a kid at Xmas, just to see (and touch) all these Apple products in one place!!
While checking out with our goodies, I was feeling a little smug, and mentioned I had just flown in from Mexico to visit the store, the nice young man, seemed non chalant, and told me they get around 3-5 people a day that fly in from Latin and S. America , just to visit the store. He told me, they get calls for directions from the airport, and they keep a limo company phone number that will pick up, visit the store, take to lunch and back to the airport for a fee!!
“the Marquis de Sade?”
MDN, who knew you were a cultured swine!
HK
“Apple’s stores have hauled in annual sales per square foot of $4,032, compared with Best Buy’s $930, Neiman Marcus’ $611, and luxury store Tiffany & Co.’s $2,666, according to Bernstein.”
http://www.redherring.com/Article.aspx?a=20332&hed=How+Apple+Stores+Beat+Tiffany
Your Welcome.
On a related note:
Expanding too far too fast can turn companies from offbeat to bland.
http://www.latimes.com/news/opinion/la-op-gross4mar04,0,2819241.story?coll=la-opinion-rightrail
“But at $4,032, Apple is eating everyone’s lunch.”
Apple is munching away but it’s too bad the competitors’ lunches are all bologna and American cheese.
“Who the hell was Jerry’s guidance counselor, the Marquis de Sade?”
Good guess. However, Jerry’s P.E. coach was the Marquis but his guidance couselor and mentor was Leopold von Sacher-Masoch.
@danielN—–I’d love to see the figures on this. Perhaps it is true, but I’m sure a Ford dealer has many more sales than a BMW dealer. So I wonder.
Ford dealerships are huge tracks of real estate compared to your “average” Ferrari dealer. It´s not total sales the article is talking about but rather sales per sq.foot of store….or showroom and lot, etc, etc in the case of autos.
Bmw has about six vehicles to choose from – Ford, about 20, 30, 50??? Ford needs lots or real estate for all its vehicles. BMW a small showroom.
Ford is losing billions and billions each year…they even have any sales????
———————
The other thing you all gotta remember – there aren´t too many places to buy the full range of Apple products except at Apple stores. Everything at Saks you can also pick up at another clothing store.
@Mac Genius
‘TowerTone: Can you get free tech support and creative support at WalMart?’
No, but you can get some appetizer samples from those nice lady’s in the food section.
‘Can you play with a video camera connected to a computer in Wal Mart and even edit your own movie?’
No, but you can watch yourself make faces in the security cameras.
and once again…….
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In Walnut Creek, CA, the Apple Store is right next door to Tiffany & Co. How’s that for managing perception! Spouses are known to say in BOTH stores: “Honey, I’m going to run next door and pick up a couple small things…”
Great story! Highly recommend reading the full story. I love it when writers get it.
@Hanz und Franz
We don’t have any stores in Australia yet but Apple is scheduled to be opening a store in Sydney some time soon.
Apple take a lot of trouble with their stores – i guess they have one team doing the stores and they have a huge list of stores they want to open. They are very fussy about location as well…
Still I am sure that germany is on the list – it can’t be too long before Apple start opening stores all over Europe.