Apple plans massive retail expansion for 2011
On the heels of a record breaking quarter, Apple's retail operations are set to dramatically expand over the next fiscal year, with 40 to 50 new locations slated to open worldwide.
The company currently operates 317 stores, 84 of which are outside the US. This quarter, Apple's retail operations brought in $3.57 billion in revenue, and increase of 75% over the previous year.
The stores also sold 874,000 Macs, up 30%. The company also reiterated that its stores continue to sell about half of those computers to customers new to the Mac. Apple reported a 52% increase in revenue per store, and a 62% increase in visitors, with a record number of 74.4 million customers entering retail locations.
After an expansion slowdown during the recession, Apple opened 24 new retail stores during the fourth fiscal quarter of 2010, 16 of which were overseas. This included flashy new flagship locations in Beijing, Shanghai, London and Paris.
The company noted that its four new stores in China are the highest trafficked in the world and among the highest performing. Apple also added Spain as its eleventh country with retail stores, after opening new locations in Barcelona and Madrid.
Apple's 2011 fiscal year, which began this month, will be "a great opportunity to continue growth," chief financial officer Peter Oppenheimer said, with 40 to 50 new stores planned (half of which will be outside the US) and a new wave of replacements planned for the company's existing, aging stores in the US.
Apple's retail program began in the US in May 2001 (expanding to 231 stores), then expanded to Japan in 2003 (now 7), the UK in 2004 (now 28 locations), followed by retail locations in Canada in 2005 (currently 18). In 2007 Apple expanded into Italy (which now has 4 stores), with locations in Australia (now 9), China (now 4), Switzerland (now 3) and Germany (now 4) all initially opening in 2008. The first store in France opened in 2009 (there's now 5), and Spain's two stores opened this year.
The company currently operates 317 stores, 84 of which are outside the US. This quarter, Apple's retail operations brought in $3.57 billion in revenue, and increase of 75% over the previous year.
The stores also sold 874,000 Macs, up 30%. The company also reiterated that its stores continue to sell about half of those computers to customers new to the Mac. Apple reported a 52% increase in revenue per store, and a 62% increase in visitors, with a record number of 74.4 million customers entering retail locations.
After an expansion slowdown during the recession, Apple opened 24 new retail stores during the fourth fiscal quarter of 2010, 16 of which were overseas. This included flashy new flagship locations in Beijing, Shanghai, London and Paris.
The company noted that its four new stores in China are the highest trafficked in the world and among the highest performing. Apple also added Spain as its eleventh country with retail stores, after opening new locations in Barcelona and Madrid.
Apple's 2011 fiscal year, which began this month, will be "a great opportunity to continue growth," chief financial officer Peter Oppenheimer said, with 40 to 50 new stores planned (half of which will be outside the US) and a new wave of replacements planned for the company's existing, aging stores in the US.
Apple's retail program began in the US in May 2001 (expanding to 231 stores), then expanded to Japan in 2003 (now 7), the UK in 2004 (now 28 locations), followed by retail locations in Canada in 2005 (currently 18). In 2007 Apple expanded into Italy (which now has 4 stores), with locations in Australia (now 9), China (now 4), Switzerland (now 3) and Germany (now 4) all initially opening in 2008. The first store in France opened in 2009 (there's now 5), and Spain's two stores opened this year.
Comments
Now that is a real important point for the investor. It indicates that China really is a growing market. Since Macs have virtually 0% market share, there is enormous groth potential. In fact, it is the question I would have had at the conference call: "Does 'highest performing' include Macs? or just the iPs?"
Can't wait to see the regional sales breakdown.
"The company noted that its four new stores in China are the highest trafficked in the world and among the highest performing. "
Now that is a real important point for the investor. It indicates that China really is a growing market. Since Macs have virtually 0% market share, there is enormous froth potential. In fact, it is the question I would have had at the conference call: "Does 'highest performing' include Macs? or just the iPs?"
moscow is next
When are they going to do a replacement store for Manhattan Village (Los Angeles/South Bay)? Store is too small for the location... although I hope they can get another spot in the mall as it is a good location for me...
What an amazing problem to have eh? BTW how are those MS stores doing? I seem to remember they started in CA.
"The company noted that its four new stores in China are the highest trafficked in the world and among the highest performing. "
Now that is a real important point for the investor. It indicates that China really is a growing market. Since Macs have virtually 0% market share, there is enormous groth potential. In fact, it is the question I would have had at the conference call: "Does 'highest performing' include Macs? or just the iPs?"
Strange (/sarcasm) ... didn't all the trolls on AI state categorically that no one in China would buy a genuine Apple product because a) They could not afford it ... and b) They would rather buy look a likes anyway.
Er, if by "currently" you mean at the of the fiscal quarter, you are correct. If "currently" includes today, that number sits at 319.
What an amazing problem to have eh? BTW how are those MS stores doing? I seem to remember they started in CA.
One of them is not doing too bad, not sure about the other one.
One of them is not doing too bad, not sure about the other one.
Now, now: let's not be cruel - they have 4 stores now.
i admit i'm not in the retail sector and wonder if a 16% increase in retail outlets over the span of a year constitutes an aggressive move.
I was just going to comment on that.
Apple has been opening 40 stores a year for some time now. That's their normal expansion rate. If they open 50 stores instead, that would be a 25% increase. While I would consider that to be a good increase. I wouldn't classify it as 'massive".
The difference though, is that Apple committed to opening at least half of those overseas. That's a change.
In fact, they committed to opening a total of 25 stores in China by the end of 2011. That would mean that almost 20 new stores would be opening in China next year. THAT would be massive!
http://www.chinatechnews.com/2010/07...re-in-shanghai
Good one, Ireland. You're so funny, har, har.
Apple has been opening 40 stores a year for some time now. That's their normal expansion rate. If they open 50 stores instead, that would be a 25% increase. While I would consider that to be a good increase. I wouldn't classify it as 'massive".
Just what I was thinking. Daniel Eran frothing about the mouth again. Here's the title for you Dan:
Apple plans it's usual retail expansion - continues to ignore Republic of Ireland.
And then Ireland, they are now 16.
Good one, Ireland. You're so funny, har, har.
Just what I was thinking. Daniel Eran frothing about the mouth again.
"Apple plans it's usual retail expansion. Continues to ignore ROI."
Yeah. Opening a hundred stores next year would be massive.
Actually, it wouldn't, it would be nuts.
Yeah. Opening a hundred stores next year would be massive.
Actually, it wouldn't, it would be nuts.
100? I wouldn't even call it "massive". I'd say the word would be "big-expansion".
100? I wouldn't even call it "massive". I'd say the word would be "big-expansion".
I think Apple is stretching it with 50.
Every year they're asked about their expansion plans, and if they're going to speed them up. Apple always replies that they do careful research into each site first. I'm not so sure how many sites they could do proper research on. They likely reject as many sites as they accept.
I remember those Gateway stores that popped up all over the place, then just as quickly went out of business. Clearly there seems to be a lot more potential internationally, especially in China. I am guessing that in order for stores to flourish there has so be sufficient demand, especially for new products, not just legacy ones. What happens if Apple hits a flat spot with the latest and greatest? Can they "adjust" the number of stores without getting into trouble financially or PR-wise?
Someone brought up the Microsoft stores earlier. I, too, wonder how they are doing. The new Windows 7 phones will at least give them some new MS branded devices to feature. This may justify their hanging on a bit longer. But clearly they are not exploding like the Apple Store has. But MS, like Apple, has plenty of cash to keep their retail "hobby" going forever if it wants to.
I remember those Gateway stores that popped up all over the place, then just as quickly went out of business. Clearly there seems to be a lot more potential internationally, especially in China. I am guessing that in order for stores to flourish there has so be sufficient demand, especially for new products, not just legacy ones. What happens if Apple hits a flat spot with the latest and greatest? Can they "adjust" the number of stores without getting into trouble financially or PR-wise?
Someone brought up the Microsoft stores earlier. I, too, wonder how they are doing.
I remember when the Gateway stores opened. Not a good analogy, since Gateway manufactured nothing - they were only trying to get a leg up on Dell, which didn't work (and look where Dell is now anyhow - sad, unless they get bought out by Oracle or HP that is.
The Microsuck store that opened at the beautiful Sony Metreon Complex in San Francisco was quickly relegated to looky-loos and gamers eager to spend hours on the XBox - not exactly condusive to robust sales, and it just as quickly closed. I can't remember whether they had something like the Genius Bar (but it would have surely been named the Duped and Clueless Bar, and would have been inundated 24/7 with frustrated MS Box buyers asking endless questions about error codes ad nauseum).
The Sony store met the same fate, beset with gamers playing free PlayStation games all day, while browsers quickly passed through - it closed shortly also, and Sony sold its interest in the whole Metreon, which went bust, and was only saved by the huge theater complex within (now AMC). I've always thought an Apple store there would really be a great edition, and provide an anchor tenant, but they opened a few blocks away near Market street, and are doing landoffice business, as you would expect.
So Apple's stores are where folks come to the mountain to get inspired, educated, and have a great time (can't wait for the "Lounge" to appear here in Palo Alto, but doubt they can spare the square footage, since it is crouded every waking minute of every day I've ever been there).
As long as Steve keeps providing the integrated products that are easy and fun to use, folks will visit the store to see what all the excitement is, in my opinion.
I am ecstatic about Apple's continued retail growth and expansion. But a little part of me wonders how much is too much. At what point does all this brick and mortar become an unsustainable drag? When does it become top heavy? I don't know, that's why I am asking.
I remember those Gateway stores that popped up all over the place, then just as quickly went out of business. Clearly there seems to be a lot more potential internationally, especially in China. I am guessing that in order for stores to flourish there has so be sufficient demand, especially for new products, not just legacy ones. What happens if Apple hits a flat spot with the latest and greatest? Can they "adjust" the number of stores without getting into trouble financially or PR-wise?
Someone brought up the Microsoft stores earlier. I, too, wonder how they are doing. The new Windows 7 phones will at least give them some new MS branded devices to feature. This may justify their hanging on a bit longer. But clearly they are not exploding like the Apple Store has. But MS, like Apple, has plenty of cash to keep their retail "hobby" going forever if it wants to.
Gateway had several problems with their stores.
The first, and one of the biggest, is that they did what Apple is working very hard NOT to do. They put their stores wherever there was a vacancy. The lowest rent areas. These stores weren't very attractive.
The second was that you couldn't usually actually BUY anything at the stores, just look and order, and sometimes not even order. Usually, you had to go to a computer in the store, go to their web site, and order there.
Lastly, their people weren't all that helpful, or even friendly, from what I remember.
Apple's stores are very profitable. So far, they are the envy of the industry. $3.47 billion in sales this quarter. They are in very good areas, and are very heavily trafficked. Lines to buy are always pretty full.
We're annoyingly served by a distributor who's just relinquished exclusivity and suffer a 2 day wait for anything from the NZ Apple Store via Apple Australia, with a markup to match. Surely someone can tell Steve that New Zealand is not a state of Australia and yes, there are more people here than Tasmania, or WA, in fact any state except NSW and Victoria...
There has to be a few million people within an hour from the store, or there may not be one.