Apple Stores reportedly stall growth at top US shopping malls
Apple Stores, which consistently rank among the most profitable retail outlets per square foot, are reportedly bogging down growth at a chain of upscale shopping malls across the U.S.
In a quarterly earnings call on Tuesday, General Growth Properties CEO Sandeep Mathrani intimated that Apple's retail locations weighed down growth for a sub-category of tenants whose stores come in at under 10,000 square-feet, reports BuzzFeed. GGP operates 97 upscale U.S. malls, 47 of which include an Apple Store.
"We experienced sales increases throughout the country," said General Growth Properties CEO Sandeep Mathrani. "Nearly every major retail category was up, with the exception of electronics, primarily due to Apple."
Mathrani said sales for under-10,000-square-foot stores grew 3 percent in 2015, bringing the average to $588 per square foot, but that number jumps to 4.5 percent if Apple Stores are excluded. The 10,000-square-foot denominator removes anchor tenants like Macy's from the equation. GGP's report only applies to 17 percent of all U.S. Apple Store locations and is not necessarily indicative of an overall decline in sales.
With the rise of iPhone, and a high-end shopping experience, Apple's standalone flagship and in-mall stores quickly became highlight destinations. In 2013, Apple Stores dominated other high-end brands, raking in an estimated $6,050 per square foot, double that of its nearest contemporary Tiffany & Co. The outlets proved so effective that other tech companies like Microsoft copied Apple's retail business model, albeit to lesser degrees of success.
Apple subsequently used its proven ability to draw in customers to negotiate favorable lease rates for flagship properties and mall outlets. Pure sales are not the only benefit of having an in-mall Apple Store, as the outlets have become destination stores for many shoppers, generating sizable increases in foot traffic.
According to BuzzFeed,, GGP previously mentioned negative Apple impact in August. At the time, Mathrani said growth for the trailing 12 months — excluding anchor stores — was at 3.4 percent, but would have been 3.9 percent if Apple Stores were not counted. In the year prior, however, Apple contributed a huge boost to sales growth. For the 12-month period ending in September 2014, GGP retail store sales growth stood at 6.7 percent, a number that would have peaked at 4 percent if not for Apple.