Thursday, January 05, 2012, 09:41 am PT (12:41 pm ET)
The next ten years of Apple Retail
Key to Apple's survival
The company's retail operations rapidly expanded, with 27 opening in 2001, followed by another 23 in 2002, and 22 more in 2003 when Apple expanded beyond the US to open its first stores in Japan. New international stores in the UK were among the 27 spots to open in 2004. Another 34 stores opened in 2005, including the first in Canada. Another 34 opened in 2006, 33 in 2007 expanded Apple's reach to Italy, while 46 opened in 2008, including the first in Germany, Switzerland, China and Australia. New stores in France were among the the 51 opened in 2009 and 39 more in 2010 expanded Apple's retail presence to Spain.
There are now more than 358 Apple Retail stores, including flagship locations in Boston, New York City, Chicago, San Francisco, Tokyo, Osaka, London, Sydney, Perth, Montreal, Munich, Zurich, Paris, Beijing, Glasgow, Honolulu and Shanghai. Rather than just being an expensive way for Apple to reach consumers, the company's retail stores have earned top profits far higher than competing retail stores of any kind. The company reports that average revenue per store is now $10.7 million.
Apple's retail operations didn't just help keep the company afloat as a source of revenue either. They also served as a distributed convention center, allowing Apple to host events and launch products. Apple cited its retail store traffic as the reason it pulled out of Macworld Expo, and in 2007 Jobs told a Forbes journalist, "Our stores were conceived and built for this moment in time - to roll out iPhone."
Without highly trafficked retail stores in prime shopping locations, Apple would have found it far harder to ship impressive volumes of iPods every winter, or draw highly publicized launch crowds as it did with the last five generations of iPhone and with two releases of iPad. It would also not have seen the sharp uptick in quarterly Mac sales, which have jumped from 659,000 in the first quarter of 2001 to 4.89 million in the company's last reported quarter.
Along with those new Macs, Apple sold over 6.6 million iPods, more than 17 million iPhones, and 11.12 million iPads. When Apple first opened its retail stores ten years ago, none of those products even existed, but today they account for nearly 40 million units per quarter for a company that a decade ago was struggling to sell less than a million per quarter.
The future of Apple Retail
Apple hasn't just opened fancy new stores over the past decade; it's increasingly used innovative new technologies to operate them. Apple began using handheld devices built by Symbol to enable mobile in-store transactions in 2005, then shifted to modern Easy Pay systems based on an iPod touch outfitted with a card reader and bar code scanner (a product other retailers have since begun using).
This holiday season, Apple launched a self-checkout Easy Pay option for customers accessed from their own iOS devices, using the Apple Store app. Customers can ring up purchases directly to their Apple ID account, minimizing the need to interact with employees. When help is needed, the app also lets customers link up with a sales person, get support from the Genius Bar, or see when the next workshop is being held.
In October, Apple executives stated that they planned to open 40 stores by the end of the year, with 75 percent of them outside the US. Within in the US, Apple said it would also be working to expand existing stores, which it said now feel "too constrained" to properly serve customers.
While dramatically expanding its outlets globally and working to make them smarter and more automated, Apple also launched a new directive last year to remove scores of unnecessary products from its Apple Store shelves: retail software boxes. One year ago, Apple opened the Mac App Store, enabling users to download software directly, often at a much lower price.
Six months later, it removed a series of software products from its shelves, including all retail boxes of iWork '09, Aperture 3, iLife '11, Apple Remote Desktop, and all Jam Packs for GarageBand. Apple has since shifted other Pro Apps, including Final Cut Pro X, Motion, Compressor, Logic Pro and MainStage to its Mac App Store exclusively.
Apple can continue to open new stores worldwide at a faster pace than it has over the previous decade, given its cash hoard and experience in opening new retail outlets. At the same time, the company continues to evaluate how to best build and operate stores, highlighted in the $3.15 million project that began last month to develop a "new prototype" Apple Store in Palo Alto, California.
"Our Palo Alto store was one of our first retail stores when we opened it nearly a decade ago and it's been incredibly popular," Apple spokesperson Amy Bessette said. "We are planning a beautiful new store just a few steps away, building on everything we've learned from our customers in Palo Alto and around the world."
The prototype project's architectural firm Bohlin Cywinski Jackson has designed a number of major Apple Stores around the world, winning multiple awards for its work on London's Covent Garden, New York's Upper West Side and China's Pudong stores.
Apple's Covent Garden store in London
Apple's Pudong store in Shanghai
The next ten years of Mac OS X
The next ten years of iPod and iTunes
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