Apple's retail strategy: stores fuel the passion

Posted May 2nd 2006 3:30PM by Dakota Smith
Filed under: Internet, Apple Inc (AAPL)

apple store in chicago - photo io_burn on flickr Writing in Wired today, Leander Kahney argues that Apple's stores are key to the company's success. "The stores are as important to Apple as the iPod or OS X when it comes to driving the public's extraordinary interest in the resurgent company -- though it's hard to say which is more important, because they're interrelated." As Leander notes, Apple says its stores are now making more than $1 billion in sales per quarter, and the company's 136 stores now account for about 17% of its total revenue.

Part of the attraction is simply the design of the stores, and indeed, Apple was one of five companies that won a Hot Retailer Award last year from ICSC (International Council of Shopping Centers), which polled 3,126 mall managers and marketing directors in the U.S. and Canada. Looking forward, Apple has said it will open 40 stores in 2006. Two factors that I would keep in mind: rising commercial rents and the fickle nature of consumers. For instance, the Apple store in downtown Soho may be a gem, but I wonder how the design will look in, say, five years -- will it be outdated? And how much re-design does Apple plan to do on its stores? (Full disclosure: I have freelanced for ICSC).

[Photo of Apple store in Chicago io_burn]

Tags: Apple, Apple stores, AppleStores, Wired

Print this

Reader Comments (Page 1 of 1)

5-03-2006 @ 6:02AM

EJ Passeos said...

Great post.
Ah, remember when the Street was nervous that these retail outlets would end up like those great Gateway stores? Jobs wouldn't hear of it. He promised and delivered a unique environment infinitely nicer than Gateway's mistake stores.
Yet, somehow, their AAPL's market share has decreased, right? I know I've watched it go steadily from 5% to now in the 2-3% range. With Apple lovers/MSFT bashers like Walt Mossberg practically begging people to buy Apples, why aren't they making progress. I don't buy the price argument, as not everyone buys $399 boxes. I personally liked the switch campaign. Or, is the monopoly, er, lead in the ipod/imusic category enough to keep the stock going upward?
Your skepticsm on the stores is warranty though. Yes, they will continue to serve their established customers, but how do I convince beginner computer users to try one?
Not to sound strange, but Dell and Gateway seemingly quite successfully sell their PCs on QVC and HSN. I'ts a great way to carefully and thoroughly explain their products, and they have the confidence of the customer because the viewer already loves and trusts QVC and HSN (they both offer 30 day unconditional 30 day return policies, which is a plus in the world of restocking fees). Moreover, it's always the higher end units they sell on TV...not the $399 box.
Again, great posts and I absolutely love the blog (would like some more comments from fellow readers, though).
Thank you.
EJ Passeos