One number holds the key to Apple Retail in 2009

Posted:
in General Discussion edited January 2014
A critical figure will emerge from Apple's conference call next Tuesday, when the company discloses how many new retail stores will open during fiscal 2009. The number will not only signify the electronics maker's commitment to reach even more customers, but will represent a wager -- big or small -- on a world economy in turmoil.



Chief financial officer Peter Oppenheimer traditionally provides the number during his review of the retail operation, and his forecast has been in the range of 35 to 40 stores almost every year. In fact, the number of grand openings has ranged from 32 to 46 until last year, when it totaled 50.



Over at ifoAppleStore, I've identified 18 Apple new store projects that will result in grand openings some time during 2008-2010. Tipsters have pointed to another 38 store projects that are in some stage of planning, and which could be either slowed down, cancelled or given the green light.



A slow-down in store openings would affect Apple in two ways -- it would reduce exposure to potential new customers in new territories and, perhaps more importantly, it would reduce the Genius Bar service options for existing customers. As the number of Apple users increases, offering support has become just as important as promoting sales at the stores.



If Apple does decide to slow down, fate has offered them the right time to do it. Typically, the largest number of stores is scheduled to open during the period from June to December, since that coincides with the company's back-to-school and holiday store promotions. Right now, Apple's planning team is working on the slowest period for stores openings, the first half of next year, which typically represents just 30 percent of grand openings.



So, a decision made now to slow down store expansion would affect fewer projects that have already been given the green light. That would result in less costs associated with delaying or canceling the projects.



At the same time, Apple's new stores have recently included a higher percentage of international locations. And almost all of the international stores that opened in fiscal 2008 were "branding" type stores, intended to provide visibility to the company's logo and products first, and to generate revenues second. Since this branding is so important to Apple, it's likely that international location openings will continue as previously scheduled.



Financially, Apple has never skimped on funding the stores through the years. Capital expenditures have increased each year, reaching $294 million for fiscal 2008. The company's lease commitments for the stores reached a substantial $1.3 billion at the end of the last quarter. With a huge cash reserve, funding new store construction and signing long-term store leases doesn't seem to be much of a liability for Apple.



Lastly, Apple has very sophisticated systems for analyzing real estate locations, revenue and store visitors. It would not be difficult to create "success" forecasts for each store that's now in the planning process, and to predict its level of profitability, even in the face of a consumer buying downturn.



Here's the IFO forecast for Apple's store openings during 2009, based on tips and other inside information:



U.S - There are several large stores in the planning stage that will definitely open over the next 18 months, including New York City, Chicago and Washington (DC). There are several smaller stores that will most likely open.

Canada - Only one potential new store, in Toronto, has been reported, although a second Vancouver store has been rumored. It's likely this country may not see any new stores beyond those.

Japan - Sales of Apple products into this highly competitive environment have never been stellar, and Japan's economy was fragile before the recent downturn. Best bet, no new stores.

Australia - A second store in Melbourne is possible, but stores in other cities probably are unlikely.

UK - The high-profile Covent Garden store is moving ahead for an early 2010 opening. A street-level store in Edinburgh is definitely possible. Stores already in the late implementation phase in Brighton, Reading and London will definitely open. However, Apple's plans to open a store on every High Street in every major city (35 to 40 total) could be delayed.

Germany - The Munich store is scheduled to open in December. Beyond that, stores in other cities are unlikely.

France - The Carousel de Louvre store is on track for a 2009 opening, and a second store in the Opera district is probable. Other stores in the country probably won't appear.

Italy - There have been persistent tips about a second or third store in cities beyond Rome, but their progress isn't known. It's likely the one existing store will serve Italy for awhile.

Switzerland - The second Zurich store will definitely open late in 2008. No other locations have been reported, and are unlikely.

China - The second store in Beijing is already ready for construction, and it's considered a high-profile, brand-carrying location. It will be built. The Shanghai store would fulfill the same role in a very important trade center, but it's not clear if the project is far enough along to make it a sure thing.\t

Here's the complete list of current and future stores.



Gary Allen is the creator and author of ifo Apple Store, which provides close watch of Apple's retail initiative. When Gary isn't busy publishing news and information on Apple's latest retail stores, he finds himself hanging out at one.
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Comments

  • Reply 1 of 41
    I would love it if they built an Apple store near me. The closest stores I have are Atlanta, Georgia (about 1.5 hours away) and Nashville, Tennessee (about 2 hours away).
  • Reply 2 of 41
    eauviveeauvive Posts: 237member
    I hope they still plan to open one in Paris ! The closest one is in London, 3 hours away, and they sell MacBooks with a wrong keyboard!
  • Reply 3 of 41
    Quote:
    Originally Posted by EauVive View Post


    I hope they still plan to open one in Paris ! The closest one is in London, 3 hours away, and they sell MacBooks with a wrong keyboard!



    I'm guessing the comment that limiting the stores they open, will overload the gen. bar staff as the growth in customers will have fewer choices.... is not a concern for you.



    Not much chance the London store is going to overload if a Paris store is delayed and those customers have to go to London!



    A real stretch in the article to make this just a little bit more important than it really is.

    Must be a slow news day......
  • Reply 4 of 41
    I have 6 stores all within a 10 mile range in northern NJ and sometimes you can even see people waiting in lines for some stores to open in the morning, like if they where having a sale or something. don't know what Apple is doing but it looks like is working, specially with the economy standing where it is
  • Reply 5 of 41
    rayzrayz Posts: 814member
    Opening retail stores when the world was moving to online sales? How they laughed .... \
  • Reply 6 of 41
    Quote:
    Originally Posted by wbrasington View Post


    A real stretch in the article to make this just a little bit more important than it really is.

    Must be a slow news day......



    But this topic is like a bone given to a dog (or meat to a lion) to the analyst/hedgefund cabal.



    Can you imagine the unrealistic expectations immediately planted by the shorts,

    feeding the tension at the conference call, with Oppenheimer handing the question

    over to Ron Johnson, who then mumbles something about how the inevitable

    slowdown in buildout doesn't mean much, because Apple's lead time for the

    newly important international locations is longer, and stressing revenue per sq. ft.

    still trumping Tiffany's, or whatever?



    The nattering nabobs of negativism then headline "Heretofore blistering Apple sales slowdown

    foreseen -- stock crashes on retail store forecast"...
  • Reply 7 of 41
    eauviveeauvive Posts: 237member
    Quote:
    Originally Posted by wbrasington View Post


    I'm guessing the comment that limiting the stores they open, will overload the gen. bar staff as the growth in customers will have fewer choices.... is not a concern for you.



    I guess not.



    Quote:

    Not much chance the London store is going to overload if a Paris store is delayed and those customers have to go to London!



    Well, buying a MacBook in London would mean not only getting a wrong keyboard, but also a wrong power outlet. Then, who knows what else, Brits are so quaint.



    Quote:

    A real stretch in the article to make this just a little bit more important than it really is.

    Must be a slow news day......



    Apple can't announce a new product each day...
  • Reply 8 of 41
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by EauVive View Post


    I hope they still plan to open one in Paris ! The closest one is in London, 3 hours away, and they sell MacBooks with a wrong keyboard!



    I hear that they click on the wrong side of the trackpad, too. (really bad joke)



    Seriously though, I'm surprised that Paris doesn't have a half dozen Apple stores. France seems like an ideal place to start getting Macs into the bulk of Europe. Are there legal/copyright/openness issues that would keep Apple's Mac out of France?
  • Reply 9 of 41
    eauviveeauvive Posts: 237member
    Quote:
    Originally Posted by solipsism View Post


    I hear that they click on the wrong side of the trackpad, too. (really bad joke)



    Seriously though, I'm surprised that Paris doesn't have a half dozen Apple stores. France seems like an ideal place to start getting Macs into the bulk of Europe. Are there legal/copyright/openness issues that would keep Apple's Mac out of France?



    I don't know. Frankly, I am more or less convinced that we Frogs were always early fans of Apple. There might be several reasons why it has been delayed.



    1. Apple is traditionnaly represented by their network of resalers. Apple doesn't want to threaten them.

    2. The cost of the real estate is too high (They planned to open an Apple Store on the Champs-Élysées, but backed off evidently for financial reasons).

    3. They estimated their maket share being too low to justify the opening.

    4. Etc. ?



    Also, no place in Europe is ideal for selling Mac abroad, because each country has its own different keyboard. Even French-speaking parts of Belgium and Switzerland use different keyboards as the plain French one. They would have to stock a lot of different versions, and I don't think it is very handy in a small space like a store.
  • Reply 10 of 41
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by EauVive View Post


    Also, no place in Europe is ideal for selling Mac abroad, because each country has its own different keyboard. Even French-speaking parts of Belgium and Switzerland use different keyboards as the plain French one. They would have to stock a lot of different versions, and I don't think it is very handy in a small space like a store.



    That is a pain! maybe by the next revision the keyboard buttons will be OLED so they can adapt to any language in any culture.
  • Reply 11 of 41
    Quote:
    Originally Posted by solipsism View Post


    That is a pain! maybe by the next revision the keyboard buttons will be OLED so they can adapt to any language in any culture.



    That would be cool but certainly quite against the energy savings trend!
  • Reply 12 of 41
    nceencee Posts: 836member
    Ok, so let me see if I can get this.



    Apple is doing very well, maybe even well considering the economy. So Apple may beat projections, and surprise everyone.



    - iPhone sales thru the roof (making a ton of money)

    - Laptop sales ? going up (making a ton of money)

    - iPod sales STILL going strong (making a ton of money)

    - iTunes sales heading upward (making a ton of money)

    - New App., Store sales going crazy (making a ton of money)

    - Getting ready for MacExpo and evn more new up-dates and New products (making a ton of money)





    BUT, because they aren't going to build a ton more new stores - Apple must be hurting - stock will be heading for the toilet - Analyst Suck!



    Skip
  • Reply 13 of 41
    There is clearly still room for expansion in Apple's network, but I imagine they will be cautious given the impact a stronger dollar is having on prices for ROW. While I prefer the actual Apple stores, partnering with the heavily branded third-party stores (such as they have in Sweden) might make more sense for a number of areas.



    If I were a shrewd business man though, I would sieze the opportunity to get in on cheap retail leases over the next year. I would imagine several locations would actually give them exceptional deals as a micro-anchor tenant.
  • Reply 14 of 41
    Remember, Apple has the highest retail sales $ per square foot on the planet.



    It just will not matter if it goes down. Apple supports it's customers.
  • Reply 15 of 41
    After reading the comments, I'm glad others thought of keyboard localization as a problem with international brick and mortar establishments. Maybe this will be less of a hassle as Apple reduces packaging sizes for their products to allow more physical stock in retail locations, however display models will always be a problem in this area. Can you set up a French, Swiss, and German MacBook Pro side-by-side on the table without alienating someone?



    Online is the way to go in these countries, because I'm sure this problem occurs even in my home area of Southern California. Many people speak Spanish in my area, with uncomfortably little or no English skills, and there are no Apple Stores catering to that language. I'm sure Apple loses at least a few retail sales to that dilemma in it's home state. Internationally, with languages mixed so densely, it could present a large problem.



    On the flip side of that argument, Apple needs stores in these countries just to brand themselves better there. They have great US sales, it's time to focus on international sales while they have momentum.



    As an aside, my wish is to have a flagship store open in the LA/OC/SD area, I'm ever so slightly envious of my east coast friends for there massive, beautiful stores. Southern California may have more stores already than I can name, with at least two within a 15 minute drive of my home and office, but it would be great to have the semi-religious experience of a flagship store in my area. I don't delude myself however. I know LA's population isn't dense enough, Apple's already covered the land in glowing fruit icons, and other locations need stores first. One can dream though! (Surprise me with a current store remodel Apple!)
  • Reply 16 of 41
    Quote:
    Originally Posted by AppleInsider View Post


    A slow-down in store openings would affect Apple in two ways ... it would reduce the Genius Bar service options for existing customers.



    Well, not quite. You can't lose what you didn't have!
  • Reply 17 of 41
    citycity Posts: 522member
    Apple is also expanding its reseller network. How much profit do they give up when they sell through a Best Buy?
  • Reply 18 of 41
    A great location for the next AppleStore in Canada would be Ottawa, the capital of Canada, and a prime location would be the Rideau Centre.



    The Rideau Centre is located in the tourist downtown, 1 mile East from Parliament buildings, and house both a Sears and a Sony store. There was a planned expansion of Rideau Centre discussed 2 years ago, but it never materialized.



    With the upcoming expansion of the Ottawa Congress Centre, an expansion or renovation of Rideau Centre is likely within the next 2 years.



    Rideau Centre is an ideal location for an AppleStore. Last, but not least, Rideau Centre is located next to the University of Ottawa, in an area of the City where English Canadians mix with French Canadians who represent 25% of the population of Ottawa.



    Let's hope that Apple builds a store in the upcoming expansion or renovation of Rideau Centre, Ottawa, Canada.



  • Reply 19 of 41
    citycity Posts: 522member
    Quote:
    Originally Posted by ouragan View Post


    A great location for the next AppleStore in Canada would be Ottawa, the capital of Canada, and a prime location would be the Rideau Centre.



    The Rideau Centre is located in the tourist downtown, 1 mile East from Parliament buildings, and house both a Sears and a Sony store. There was a planned expansion of Rideau Centre discussed 2 years ago, but it never materialized.



    With the upcoming expansion of the Ottawa Congress Centre, an expansion or renovation of Rideau Centre is likely within the next 2 years.



    Rideau Centre is an ideal location for an AppleStore. Last, but not least, Rideau Centre is located next to the University of Ottawa, in an area of the City where English Canadians mix with French Canadians who represent 25% of the population of Ottawa.



    Let's hope that Apple builds a store in the upcoming expansion or renovation of Rideau Centre, Ottawa, Canada.







    Isn't that just a big mall?
  • Reply 20 of 41
    Quote:
    Originally Posted by solipsism View Post


    That is a pain! maybe by the next revision the keyboard buttons will be OLED so they can adapt to any language in any culture.



    Maybe we need a version where the keyboard is all glass so the keys can be anywhere and say anything you want. You know.... kind of like a tablet.
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