How much for that Apple in the window?


Fortune calls Apple America's best retailer
No doubt about it, I am an Apple fan. This blog is composed on an iMac and an iBook and hosted by MacHighway.com (formerly Itsamac.com). While no company is perfect, Apple has hit more than it's fair share of home runs. Before the Apple I and Apple ][, no one thought that home computers were practical. Before the Macintosh, most people believed that computers had to be text based. Before the iPod and iTunes, no one had profitably sold music downloads.

What's really amazing is the attention to detail, especially when it comes to the user experience. Apple pioneered it, and it is probably Steve Job's greatest contribution to the company. Details and fit have defined Apple's products almost from the very start.

I've never visited an Apple Store, so I didn't know that the customer experience was so vital, but it doesn't surprise me. And it pays off big.

And not just the architecture. Saks, whose flagship is down the street, generates sales of $362 per square foot a year. Best Buy (Charts) stores turn $930 - tops for electronics retailers - while Tiffany & Co. (Charts) takes in $2,666. Audrey Hepburn liked Tiffany's for breakfast. But at $4,032, Apple is eating everyone's lunch.

That astonishing number, from a Sanford C. Bernstein report, is merely the average of Apple's 174 stores, which attract 13,800 visitors a week. (The Fifth Avenue store averages 50,000-plus.) In 2004, Apple reached $1 billion in annual sales faster than any retailer in history; last year, sales reached $1 billion a quarter. And now comes the next, if not must-have, then must-see, product.

"Our stores were conceived and built for this moment in time - to roll out iPhone," says Jobs, summoning one to the table with a tantalizing I've-got-the-future-in-my-pocket twinkle. If sales are anywhere near expectations - Apple (Charts) hopes to move ten million iPhones in 2008 - the typical Apple Store could be selling, in absolute terms, as much as a Best Buy, and with just a fraction of the selling space.

Amazingly impressive numbers.

That's not all though. Think about it. Micro$oft built their business on legalities and acquisitions and made the software industry possible, but they don't innovate. M$ distributes, and for years their deals with the original equipment manufacturers made it look like their software was the only realistic choice. Most computer manufacturers focus either on reducing cost or delivering performance.

Only Apple focuses on the user experience first and last.

That gives them a huge lever as a competitive advantage, one far stronger than their relative size would indicate. Just think back a few years. Eliminating the floppy disk? That was Apple. Popularizing the USB standard? That was Apple. Colored translucent plastics in consumer electronics? That was Apple. Digital movie editing for the masses? Commodore and NewTek did it first with the Amiga modified into the Video Toaster, but it took Apple to make it practical AND include it as part of an entry-level application suite shipped with every machine.

That is why store details like this don't surprise me.

The most striking thing, though, is what you don't see. No. 1: clutter. Jobs has focused Apple's resources on fewer than 20 products, and those have steadily been shrinking in size. Backroom inventory, then, can shrink in physical volume even as sales volume grows. Also missing, at the newest stores, anyway, is a checkout counter. The system Apple developed, EasyPay, lets salespeople wander the floor with wireless credit-card readers and ask, "Would you like to pay for that?"

The interiors, too, have been distilled to a minimum of elements. "We've gotten it down so there's only three materials we're using: glass, stainless steel, and wood," says Johnson. "We spent a year and a half perfecting that steel. Stainless steel can be cold if you don't get the finish right. See the bounce? See the blues up there?" No, frankly, but Apple hunted down a Japanese supplier and pushed it to achieve the effect by blasting the metal with small beads.

Apple isn't selling electronics, software, and web services. They are selling the user experience while everyone else is focusing on the hardware and software. That may just make them one of the first 21st Century companies.

And no one is forcing anyone to choose Apple.

Hat tip daringfireball.net.

— NeoWayland

Posted: Fri - March 9, 2007 at 05:02 AM  Tag


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