The Success of Apple's Retail Stores

More people now visit Apple's 326 stores in a single quarter than the 60 million who visited Walt Disney Co.'s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple's annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That's far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

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Further down is this:

Apple's success with its stores stands out at a time when many retailers have struggled. In 2009, when retail sales declined 2.4%—the first down year in several decades, according to retail consultancy Customer Growth Partners—Apple's retail sales rose roughly 7%. In 2010, Apple's retail sales, excluding online, jumped 70% to $11.7 billion, or about 15% of its revenues of $76.3 billion, handily exceeding the overall retail industry's sales growth of 4.5%.

Other retailers have tried to copy everything from Apple's in-house tech support to store layout. Best Buy acquired computer repair service Geek Squad in October 2002, a year after Apple opened its first store, but it has failed to reinvigorate its business. Best Buy's profit margin hovers at about 1% before taxes and excluding online sales, estimates Customer Growth Partners. In comparison, Needham & Co. puts Apple stores' profit margin at 26.9%.

It's all about the experience. Apple's products are the "cool" in products to own. Its competitors are even made fun of in popular television shows. (See the video clip below.)

When you walk into an Apple store you want to play with the products and Apple facilitates that desire. Like going to Las Vegas, you walk into Caesar's Palace and feel the ambiance - the marble and the brass statues, the furniture and window treatments, the vaulted ceilings, the expensive shops - all that luxury just sitting there urging you to splurge. Apple's stores create the same feeling. You walk in with the attitude, "Man I'd like to own an iPad, but I just can't afford one." Sure enough, you're walking out with an iPad and asking yourself, "How did I ever get by without one?"

Compare the experience of shopping at an Apple store with shopping at Best Buy or Wal-Mart. First, you're inundated with too much stuff packed into a far too complex store layout. Second, even if you could play with the merchandise, much of it is somehow inoperable or just not fun, and it's not cool. And in the case of Wal-Mart, too much of the stuff you can't touch and play with, and too much of it is broken.

  

Comments

[Seattle Tech Support]

I support apple products too. It's cool.

[Apple repair Las Vegas]

A very nice post. I remember the time when we have to rush and find a place to get a computer repair. Internet has showed us a path where a consumer can get their problems resolved there and then. Computer has been an essential as well as integral part of our life and keep that working is very important. I just subscribed to your post and hope more good posts like this over the coming days. Thanks