Apple retail stores 'bulging at the seams' at 8400 average square feet
Apple's original vision for its retail operations is proving too small, as the company's stores are continuously mobbed with crowds looking to buy iPhones, iPads and Macs.
When the company's retail operations began 11 years ago, Apple initially targeted 6,000-square-foot stores as the ideal size, according to analyst Charlie Wolf with Needham & Company. As of Apple's fiscal 2011 10-K report, Apple's retail stores are now slightly larger, at 8,400 square feet per store.
But even as they have grown, Apple's retail stores are still "bulging at the seams," according to Wolf. That's because the number of visitors on a per-store basis has grown at a 15.3 percent annual rate, making the initial vision of 6,000-square-foot store just too small.
Apple's initial plans also called for the company to open around 100 stores. But at the end of the March quarter, Apple had a total of 363 retail stores open, with a third of them overseas.
"The company has had to rethink this strategy as the crowds have grown," Wolf wrote in a note to investors on Tuesday. "Apple is moving some existing stores to larger locations."
For example, Apple is currently expanding its store in New York City's SoHo neighborhood in Lower Manhattan. The project has required Apple to build a $1.4 million temporary store to serve customers while construction is underway.
Apple is also building a new, larger retail store in Palo Alto, Calif., just steps away from the original location, in order to better serve customers. The 15,030-square-foot project has been referred to by Apple as a "prototype" store that will draw on the company's more than 10 years of experience in designing iconic and heavily trafficked retail outlets.
In addition to expanding some current stores, Apple is also building new stores that are even larger. Among the new megastores are a 30,000-square-foot space in London's, Covent Garden, a 16,000-square-foot store with a giant glass cylinder in the Pudong district of Shanghai, and a 20,000-square foot space in New York City's historic Grand Central Terminal.
When the company's retail operations began 11 years ago, Apple initially targeted 6,000-square-foot stores as the ideal size, according to analyst Charlie Wolf with Needham & Company. As of Apple's fiscal 2011 10-K report, Apple's retail stores are now slightly larger, at 8,400 square feet per store.
But even as they have grown, Apple's retail stores are still "bulging at the seams," according to Wolf. That's because the number of visitors on a per-store basis has grown at a 15.3 percent annual rate, making the initial vision of 6,000-square-foot store just too small.
Apple's initial plans also called for the company to open around 100 stores. But at the end of the March quarter, Apple had a total of 363 retail stores open, with a third of them overseas.
"The company has had to rethink this strategy as the crowds have grown," Wolf wrote in a note to investors on Tuesday. "Apple is moving some existing stores to larger locations."
For example, Apple is currently expanding its store in New York City's SoHo neighborhood in Lower Manhattan. The project has required Apple to build a $1.4 million temporary store to serve customers while construction is underway.
Apple is also building a new, larger retail store in Palo Alto, Calif., just steps away from the original location, in order to better serve customers. The 15,030-square-foot project has been referred to by Apple as a "prototype" store that will draw on the company's more than 10 years of experience in designing iconic and heavily trafficked retail outlets.
In addition to expanding some current stores, Apple is also building new stores that are even larger. Among the new megastores are a 30,000-square-foot space in London's, Covent Garden, a 16,000-square-foot store with a giant glass cylinder in the Pudong district of Shanghai, and a 20,000-square foot space in New York City's historic Grand Central Terminal.
Comments
These stores can definitely use some more space. Every Apple store I have been to has been too crowded. My wife hates to even go in one now because they are so crowded. Good problem to have to deal with especially if you are a shareholder.
Agreed. I've never seen an Apple store that wasn't packed with customers.
Remember when Apple launched the stores? All the naysayers saying "Dell tried it and it didn't work" and "Apple is really doomed this time"..... It is really funny to see how it turned out.
The problem I see is how to improve customer flow and product layout if the issue is really just related to too many people coming through the doors. It's not like Apple has new products to showcase in another section of the store. It just comes down to how many tables of iPads, iPhones, MacBook's, etc each store can hold. The back-end of the store, where the 3rd party products are always seems to be the place where customers who couldn't get to a table of product go, or for those with a genius appt wait. It's not efficient, although I understand Apple sets up the stores this way to encourage add-on sales.
I would think they could sell more 3rd party products and rope consumers further into the ecosystem if they did a better job of having things like headsets, speakers, external drives, etc nearer to the Macs and i products. I can't tell you how many times my wife will put on one of the 3rd party headsets to listen to a song on an iPhone and comment how good it sounds and how comfortable they are. She could easily be sold on a pair if she didn't have to walk away to go find the model she was listening to. I would be the same if they had some great speakers, say the Zeppelin Air, setup for testing with my own iPhone and song choice.
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Originally Posted by jragosta
Agreed. I've never seen an Apple store that wasn't packed with customers.
Remember when Apple launched the stores? All the naysayers saying "Dell tried it and it didn't work" and "Apple is really doomed this time"..... It is really funny to see how it turned out.
If they were twice the size and had the same number of visitors Apple haters would be crowing they were 'half empty'.
I also suspect visiting Apple stores is akin to going to Disney, people just love being there. Do we know if larger would really translate into more sales? I hope so and I guess Apple think so and they know what they are doing. (answered my own question!)
p.s. when is AI going to fix this new system? Or do I I need IE and Windows to run it to get the selection of various smily faces?
The product interaction opportunities are important, but I think they often come at the expense of other customers. I also wish they carried a wider selection of accessories, so that it remains the first place I go for my needs. Things like the lack of a network attached storage device, a wider range of iPod/iPhone/iPad docks, and (shrug) even some things that compete with their core offerings like Sonos.
It isn't that the performance of the segment is waning-- just that their long-term prospects seem better if there is more of a complete offering, especially as other retailers are suffering.
The Apple Retail Store at the Promenade located at 17711 Chenal Parkway in Little Rock Arkansas is relatively quiet. I have not seen more than 40 customers in the store at once; actually quite enjoyable as opposed to Apple Store Valley Fair located at Valley Fair Mall at 2855 Stevens Creek Blvd in Santa Clara California.
The Apple Retail Store at the Promenade had only approximately 50 people in line for the opening of the new iPad (3rd generation).
The Apple Retail Store at Valley Fair Mall had thousands upon thousands of people in line for the opening of the iPhone 4S.
"It is irritating how I have to drive over 100 miles to the other side of Memphis to the closest store."
Don't complain. I have to drive over 135 miles to the nearest store and its in the middle of downtown Dallas. :-(
en
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Originally Posted by not1lost
Again.... If Apple had many more "LOCAL" stores people would not have to flood the handfull of stores they have....
Completely agree! If you think the situation is bad in your area, think of China, which is Apple's fastest growing market. They have, what, three stores in China? This is crazy. As Apple's profits double each year, their customer base also doubles. They need to do something radical about building stores faster. They're way past the, "every store a unique work of art" phase!
Your sooo right! It's insanity ! Look at Walmart when their success took off they started building stores as fast as they could EVERYWHERE it doesn't look like its hurt them.... I know Apple is unique and doesn't need as many stores as Walmart in as many places. But come on Apple join the real world where gas prices are almost four bucks a gallon! Where people WANT TO go to your stores and BUY your products and WOULD MUCH MORE OFTEN if they were more accessable and didn't have to spend $50.00 on gas and three hours just to wait in line to look around and talk to a real person about your products.
It may be that the "store-within-a-store" efforts at WalMart, et.al., are designed to take some of the heat off the primary retail stores.
I visited the Birmingham, AL Apple Store this past weekend, just past lunchtime on Sunday. You could stir the folks with a stick. Once past the greeter, I ducked into the far-right aisle, even though the accessory I wanted was on the left side of the store... it was the least crowded route. Once past all the tables, it was easy to cross over.
The only comment I could make about their retail experience is, there seem to be a LOT of employees on the floor, but it's not always clear what their roles are. Over time, I have observed about a 50% chance of being flat-out ignored by the very first employee I encounter, presumably because they are busy with another task. If I had to wait more than a couple of minutes, it could become a really negative experience, but I've found someone helpful relatively quickly.
My local Apple Store is usually full of kids using the free internet access to update their Facebook page. Address that problem and much of the over crowding at weekends and late afternoon would go away.
I have to laugh - it's not crowded because you haven't seen more than 40 customers in the store at once.
That's roughly the entire annual customer base of the average Microsoft store.
I understand that concern but I would argue that the open WiFi and fully functioning devices are a key part of theApple Store's success. Then consider that these kids are tomorrow's decision makers so shunning them now might not be in Apple's best longerm interest.
Apple got three things right.
Tactility. The ability to actually try the gear out on your own without navigating through a portcullis of bulky security devices, WiFi passwords and so on.
Design. Keeping the interior layout and visuals of the stores very simple and not distracting from checking out the products, as well as placing the product at a regular desktop height instead of cramming it in on shelves that require the customer to reach up or down.
Support. Making technical support in the stores accessible and central to the concept.
Those three things were clear, in my view, from the first day I laid eyes on an Apple Store retail location back in 2002.
I think Apple would do well to consider having more locations. I'm convinced now that a place like Duluth, MN or Fargo, ND or Allentown, PA or a good many college towns could support an Apple Store, and I'm even more convinced that the major metro markets could easily support neighborhood stores rather than just relying on a few major malls that are difficult to get to. I'm less convinced by the idea of making the existing locations bigger. This suits mall owners and operators with suitable spaces more than it suits Apple.
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Originally Posted by Shaun, UK
My local Apple Store is usually full of kids using the free internet access to update their Facebook page.
Could have sworn Apple blocked Facebook for that very reason.