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Apple’s Retail Expansion: Perfection Grows

The success of Apple’s retail operation has been breathtaking.
December 7, 2012

Apple’s retail stores were once viewed as a poorly conceived test to see if consumers would want to go to a brick-and-mortar location to buy Macs. But over the last several years, Apple has once again found a way to make the detractors look foolish.

iCube: Apple’s iconic store on Fifth Avenue in New York.

The first Apple retail stores opened in 2001. Since then, the company has been expanding its retail footprint at a dramatic pace. At the end of October, Apple announced that it had a total of 250 U.S. retail stores and 140 international retail stores. During its 2012 fiscal year ended September 29, Apple added 33 new stores to its chain.

Macstories recently took stock of Apple’s retail strategy, and found that over the last several years, its main area of focus has been international markets.

Until 2003, Macstories is reporting, Apple didn’t open a single international store. By 2009, however, over half of its openings – 56 percent – were in international markets. In 2010, that figure grew to 62 percent, followed by 70 percent in 2011. In 2012, the international market’s share of Apple openings reached 83 percent.

Not surprisingly, the number of people that have gone to Apple stores over the years has increased dramatically. In the third quarter of 2002, Apple stores accommodated more than 50,000 visitors, according to Macstories’ data. During the third quarter of 2012, attendance grew to nearly 250,000 visitors.

Apple’s financial performance, meanwhile, has soared. It took Apple 10 quarters to finally generate a profit on its retail stores, but since then, things have been going quite well. In fact, Apple announced in its latest annual filing that net sales across its Retail segment jumped $4.7 billion, or 33 percent, year-over-year. Average revenue per store was $51.5 million, up 19 percent compared to the same period in 2011.

So, how did it happen? When it’s all said and done, it’s about the near-perfect experience that Apple delivers in each of its stores. There is simply no retail experience like the one Apple offers, and there isn’t another tech retailer that has a real clue on what customers want.

Entering the Apple Store is different. The stores are clean, their layouts are top-notch, and they’re not bogged down by too many products. And although Apple is trying to sell its products, it’s just fine with customers surfing the Web or checking e-mail and leaving. It’s that laid-back attitude that probably helps Apple sell more products.

Any discussion on Apple’s retail success would be remiss if it didn’t include mention of the company’s salespeople. Apple’s salespeople actually know what they’re talking about. And if trouble happens with any product, bringing it to the Genius Bar is simple and (mostly) trouble-free.

Not surprisingly, other companies have been trying to mimic Apple’s strategy. Microsoft Stores, which have been opened in close proximity to Apple stores, try to take the same tack, by making stores inviting. Best Buy has launched some prototype designs that makes its Geek Squad repair team the centerpiece of its layout.

But whether those companies will be able to achieve Apple-like success remains to be seen. Apple has done the impossible: perfect the brick-and-mortar experience in an online-shopping world. And chances are, lightning won’t strike twice.

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Illustration by Rose Wong

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