Retail Update: future stores, missing stores, and Genius Bar stresses

Posted:
in General Discussion edited January 2014
IfoAppleStore's Gary Allen offers an update on all things Apple retail.



Apple's retail stores are in a period of quiet but active growth, especially as we start the second half of the year. Traditionally these later months see a rush of new stores in preparation for the crucial holiday shopping season. Even so, Apple's Retail segment hiccuped during the last fiscal quarter, achieving an increase in sales and profits compared to the same period last year, but a decrease when compared to the previous quarter.



Apple opened stores #112 and 113 on July 16th in Portland, Ore. and Northbrook, Ill. -- the 11th store and 12th openings of 2005. In an unusual move, Apple also opened an enlarged and remodeled version of its existing store at The Westchester Mall in White Plains, N.Y. The new store includes a much longer Genius Bar to provide service and support, and a new Studio bar offering creative application support.



Overseas, tipsters say Apple staffers have been scouting store locations in Berlin. The company is believed to be assessing locations on the upscale Kurfürstendamm row, in the western part of the formerly-divided city. The street is dominated by the six-story KaDeWe department store, which proclaims itself the largest department store in continental Europe, but also includes high-end retailers Cartier, Yves Saint Laurent, Chanel, Tommy Hilfiger, and Gucci.



At the same time, a Swiss Apple executive announced the company will open a retail store in Zurich, but didn't provide a timetable or other details. The city's Bahnhofstrasse is home to many high-end international retailers, and must be considered a prime location for a street-level store. As for Paris, a French Web writer says he noticed Steve Jobs at the Regent Street (London) store and pleaded for Apple to open a Paris store. Jobs reportedly shot back, "We are...in 2007!"



In Japan, plans continue to open additional stores in Tokyo and Osaka, and first-time stores in the far-northern city of Sendai and the far-southern city of Fukuoka. More stores are likely for the UK, including Edinburgh and Glasgow (Scotland), Manchester, and the university towns of Oxford and Cambridge.



Elsewhere, Apple has been providing architectural, interior design and other assistance to international Apple retailers who operate Apple Centres, which have many familiar features: white walls, wood furniture and hands-on displays of all Apple's products. There are now Centres all over Europe and Scandanavia, and in several far-flung locations such as Argentina, Ecuador, South Africa, Kuwait, Hong Kong and even Beijing.



Back in the United States, Apple's goal to have 125 stores open by the end of September is on-target. There are 35 U.S. stores locations confirmed by various sources for near-term openings, and another 17 stores on the "probable" list in the U.S. and abroad. There are also several unannounced future store sites in metro areas of the U.S. already served by Apple stores, including Denver, Los Angeles, south Florida, Chicago, New York/New Jersey, and Dallas/Fort Worth.



Lastly, no discussion of store locations would be complete without a mention of two long-neglected cities: Birmingham (Ala.) and New Orleans. The former was reportedly the fifth ever Apple store location planned. Staff interviews were even held, but for some reason the store was never built or opened. As for New Orleans, it represents a 180,000 square-mile wasteland across the South without an Apple store. The city itself has 1.3 million residents served by fewer than 10 resellers, according to a list on Apple's Web site.



Adding up all the locations up, Apple could easily have 145 stores open by this time next year. And based on previous store opening schedules, the second half of 2006 could add another 20 stores to the chain.



Looking further out for stores locations, the Retail segment's recent financial performance could be a planning consideration. Retail store revenues for the third fiscal quarter totaled $555 million, and profits totaled $29 million. Both figures represent increases compared to the same quarter of 2004. But they were decreases of 3% and 31% respectively when compared to the previous quarter of 2005.



The Retail segment has suffered a similar hiccup twice before, and Apple CFO Peter Oppenheimer claims this latest decline was "largely seasonal."



Nevertheless, there is no doubt that Apple wants to keep retail revenues peaking as it continues to invest hundreds of millions into new store construction, lease and payroll costs.



Much of the company's store location planning must now center around locations in existing markets, where Apple's increased market share is putting pressure on the Genius Bars to keep up with the line of visitors.



According to financial analysts Piper Jaffray, Apple now has a 4.5% market share, compared to 3.7% last year. That not only represents a increase in sales, but also an increase in customer support that falls directly onto the retail stores. There have been reports of long-waiting lines for assistance at Genius Bars, and that reservations are often completely filled by 5 p.m. or earlier. A tipster claims Apple will extend the stores' hours to create more Genius Bar time slots. But that move will only increase payrolls and put pressure on the bottom line.



The next three months appear to be a critical period for the Retail segment, as they balance expansion, increased popularity of Apple's products, and the need to keep providing top-notch sales and service. As long as none of these elements swing out of range, you can expect to see many more back-lit Apple logos at shopping malls both in the U.S. and around the world.



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.

Comments

  • Reply 1 of 19
    melgrossmelgross Posts: 33,510member
    Retail is difficult, and Apple is in a difficult position as well.



    As was noted, Apple has spent hundreds of millions expanding their presence. It takes time to get that back. One reason profits seem to be small in that segment of their business. Most large retailers, in recent years, have not done well, even to the point of retrenching.



    This is an important quarter. If the sales and profits are up by several percent over what the new stores will contribute, then all is well. If not, then they will have to re-think their concepts.



    But the stores are important, even though they sell only a small part of Apple's goods at this point.
  • Reply 2 of 19
    ipodandimacipodandimac Posts: 3,273member
    i thought apple realized that Gateway had way too many stores. There over-saturating their own market. tsk tsk.
  • Reply 3 of 19
    ouraganouragan Posts: 437member
    Being Canadian, I want Apple to increase its visibility by opening stores in large Canadian cities besides Toronto.



    Montreal (Place Ville-Marie or Place Montreal Trust), Vancouver, Ottawa (Rideau Centre) and Calgary all deserve to get an Apple store. Smaller metropolitan areas, provincial capitals like Quebec City, Edmonton, Halifax and Winnipeg should also be considered.



    Finally, there are a number of cities around Toronto which could benefit from an Apple store. London comes to mind, but it's not alone.







    Pierre
  • Reply 4 of 19
    synosyno Posts: 33member
    i like the idea of new stores, i like to use my mac the same day i buy it. and the help from the genius bar is handy too!
  • Reply 5 of 19
    nagrommenagromme Posts: 2,834member
    They're not over-saturating the market unless they are building multiple stores for the same people. That's not happening--they're adding more stores to serve MORE people.



    And remember that the stores do a big chunk of switcher business. Almost half of their Mac buyers are FIRST time Mac buyers, I seem to recall.
  • Reply 6 of 19
    awalawal Posts: 66member
    An Apple store in the Annapolis, Maryland Mall is opening "Summer 2005". Just in time for me to go back to school in NYC...
  • Reply 7 of 19
    ringoringo Posts: 329member
    Quote:

    Originally posted by AWAL

    An Apple store in the Annapolis, Maryland Mall is opening "Summer 2005". Just in time for me to go back to school in NYC...



    Poor baby. There couldn't possibly be an Apple Store more than 45 minutes away from you.
  • Reply 8 of 19
    awalawal Posts: 66member
    Quote:

    Originally posted by Ringo

    Poor baby. There couldn't possibly be an Apple Store more than 45 minutes away from you.



    Or two?
  • Reply 9 of 19
    midwintermidwinter Posts: 10,060member
    WTF happened to the Salt Lake City store?
  • Reply 10 of 19
    melgrossmelgross Posts: 33,510member
    Quote:

    Originally posted by ipodandimac

    i thought apple realized that Gateway had way too many stores. There over-saturating their own market. tsk tsk.



    Gateway was incompetent. They put stores in the cheapest locations. They didn't do their homework. At first you couldn't even buy a machine there. Were you ever in a Gateway store? Terrible.
  • Reply 11 of 19
    somynonasomynona Posts: 40member
    Quote:

    A tipster claims Apple will extend the stores' hours to create more Genius Bar time slots. But that move will only increase payrolls and put pressure on the bottom line.



    They're increasing market share, making the most money they've ever made, and they're going to be more worried about the bottom line than making sure customer support keeps up with their market share? Yeah right.
  • Reply 12 of 19
    glamingoglamingo Posts: 46member
    I hope they'l soon put a store in Australia. Theres probably like only 0.01 percent of the market here though, but still.
  • Reply 13 of 19
    aquamacaquamac Posts: 585member
    Quote:

    Originally posted by ipodandimac

    i thought apple realized that Gateway had way too many stores. There over-saturating their own market. tsk tsk.



    That is exactly what Apple has not done and has been very careful not to do. Apple has played it smart by slowly opening stores across the world. It is one of the biggest pitfalls in retail it to overextend too fast. The 2 apple stores by me are usually very busy. Apple is careful to do there homework. . A q u a M a c .
  • Reply 14 of 19
    melgrossmelgross Posts: 33,510member
    Quote:

    Originally posted by Somynona

    They're increasing market share, making the most money they've ever made, and they're going to be more worried about the bottom line than making sure customer support keeps up with their market share? Yeah right.



    It was an observation. The financial markets watch that sort of thing even if you don't.
  • Reply 15 of 19
    benroethigbenroethig Posts: 2,782member
    How about open stores in places other than Chicago, Los Angeles, and New York?
  • Reply 16 of 19
    bronxitebronxite Posts: 104member
    Quote:

    Originally posted by BenRoethig

    How about open stores in places other than Chicago, Los Angeles, and New York?



    you mean like the over 100 other stores they have opened outside of those 3 millions of people metro areas?
  • Reply 17 of 19
    Interesting that they singled out New Orleans and Birmingham as an example of "missing stores". I don't know much about Birmingham but my unexpert opinion would be against a New Orleans store.



    I lived there for 8 months recently and worked at a Barnes & Noble in the Quarter. That store had to close due to lack of business. You'd figure between all the tourists and "1.3 millions locals" that books sales would be quite comfortable BUT .... somehow not. Here's what I learned about NOLA that tells me Apple wouldn't be a great fit: the locals aren't big spenders, especially those who frequent the downtown CBD/Quarter area where you would HAVE to put the Apple store. And they're not trend following folks either. The buzz about iPods didn't mean too much to them. You can see it in the stores...those that don't cater to tourists are small local cheapie sort of places. There's only 3 Starbucks in the entire city for cryin' out loud! (BTW this is one big reason that I love New Orleans.)



    Then there are the tourists: Lots of tourists with money but are they going to be buying desktops, displays, or even laptops that they'd have to cart back on the plane with them? I could see iPods and other portable things selling ok, but that's it. Only a mini style store focusing on iPods would have half a chance. Plus tourist season is fairly short, basically a few months in Spring and Fall. And who's going to be buying ANYTHING during Mardi Gras anyway? But that leads me to the one benefit of New Orleans...the tourists are 90% drunk at any time of the year. And drunk people love buying things. Impulsive buying is always good for a company that has cool stuff like Apple does.
  • Reply 18 of 19
    midwintermidwinter Posts: 10,060member
    Good points about NO. I hadn't really thought about the Quarter as a bad shopping area, but it makes a lot of sense that it would utterly suck to put an Apple store there.



    I'm still waiting on the SLC store, which seems to be a pretty weird omission. SLC is like NO in some ways (only about 500K people but about 1.3 million in the immediate area)...the difference is that almost the entire population of Utah lives within an hour of downtown SLC.
  • Reply 19 of 19
    geotaygeotay Posts: 1member
    I'm surprised by the info that Birmingham was to be one of the original locations for an Apple store. I've been wondering if and when Apple would ever build there and now I guess (for whatever reason) the answer is no.
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