BW 01': "Sorry, Steve: Here's Why Apple Stores Won't Work "

Hello folks, I've just ran into an old Business Week story about the dark future of Apple Retail stores, its really funny to look back at it now, the story slams Apple's retail strategy and explain way they will miserably fail.

Its seems ironic to read it today 6 years later, especially that today we are getting some great numbers from Apple retail.
It seems that Apple's huge investment in retail stores continues to pay off, Apple's retail stores accounted for 13 percent of the total revenues generated by its U.S. retail sector in the third quarter!

This are pretty amazing stats, its incredible to see how far along Apple has come with its retail strategy, and carefully planned it, and of course execute it.

Here are some more detailed stats, Apple's highest grossing stores in the US:

1. N.Y Fifth Avenue Store which sold about 5 Macs every hour and 1 iPod every two minuteson its way to generating a whooping $45 million in revenues.
2. N.Y SoHo Store with approximatly $23 million
3. San Francisco/L.A/Chicago flagship outfit, all both rounded at third place with approx 14 Million in sales.

In total, Apple operates eight high-profile stores in three countries that are intended to provide a sales point for both locals and travelers. Just as important, they are expected to project and publicize the Apple brand with their architecture and interior design. Each year, the company spends an undisclosed sum on marketing costs for the these locations, ranging up to $10 million.

According to the Apple's last annual report, leases on the high-profile stores are longer than other stores, ranging from 10 to 14 years. Lease costs are consequently higher, the company says, ranging from $4 million to $33 million per location, per year as of Sept. 2006. Construction costs for the bigger stores are also higher, ranging up to $12 million for the Fifth Avenue store. Once the stores open, their size results in higher operating costs because of increased staffing, and in the case of Fifth Avenue, its 24-hour operation.

The high-profile stores also contribute heavily to sales of Macs and iPods, although not in equal numbers. The five stores last quarter accounted for about 30,000 desktop and notebook computers, along with over 127,000 iPods. But each stores seems to have a "personality" for sales of the two categories: Fifth Avenue sells more iPods than computers by 5:1, while The Grove (S. Calif.) sells in the ratio of about 2:1. The other three stores are somewhere in the middle of these figures.


I think it's really interesting to have an in depth observation of Apple's retail strategy which turned out to be an enormous success, helping to drive the revenues each and every quarter. Read the full story at AppleInsider.