Apple Store Sales Lift Shopping District—Dramatically

March 6, 2013

An upscale two-block collection of retail stores in west Berkeley (Calif.) was doing well for many years, but revenues skyrocketed just after the Fourth Street Apple retail store opened in 2011. According to a just-released economic analysis by the city, the store quadrupled sales tax revenues for the district over a two-year period, an increase unmatched by any category in any other city shopping district. The city of 102,000 sits along San Francisco Bay, and is home to the University of California. Demographically the city covers a wide span of education, income and tech usage. The store’s location along Interstate 80 makes it an easy destination for people from many surrounding cities. In the report, the city’s economic development manager describes Berkeley’s 10 shopping districts, and notes the trends since January 2010. Within those districts, most category sales tax income was lackluster. Restaurants, service stations, and auto sales showed the most gains of any category, but only from 15% to 35% over the two years. However, for Fourth Street, the category that includes the Apple store increased from from about $45,000 in sales tax revenue in the second quarter of 2011, to about $205,000 in the first quarter of 2012, a 450 percent increase.

Interestingly, the Apple store’s presence didn’t guarantee improvement by other categories in the Fourth Street district—only restaurants showed an increase after the Apple store opened, while the miscellaneous and apparel store categories were already on the rise. The “all other” category has remained flat since the Apple store opened.

The sales tax revenue represents one percent of total taxable purchases at the businesses. In this case, the Q1 2012 figure indicates the Apple store sold $16 million in merchandise during the quarter. That figure compares to the $17.1 million per-store average revenue back in Q1 2012, which is the all-time record high.

If the 2010 to 2012 trend line were to continue at exactly the same rate as Q1 2012, and other stores’ revenues in the category remained flat, the chart data indicates the Apple store would have paid $385,000 in local sales tax during the first quarter of 2013, indicating $38.4 million in sales. That’s more than twice the per-store average for the chain.

Top Secret

The report provides a rare look into an Apple store’s revenues, which are a closely-guarded secret by Apple, and usually protected or obscured by other companies and governments who have access to the numbers.

In fact, the Berkeley report, the author noted that, “We have had to suppress some charts when one firm dominated a ‘sector’ and the economic information in the chart could be identifiable with that firm.” It’s clear that the Apple store was one of those firms.

The report notes that the store was assigned to the category of “appliances and furniture,” instead of being assigned to the more-logical “electronic equipment” category that was used in some other districts. It’s not clear how many or which other stores were assigned to that category from Fourth Street. Had the Apple been listed in the electronics category, it most likely would have been the only such store within the district, and it’s sales tax contribution would have been easy to calculate. As a result, the city seems to have assigned the store to the latter category to disguise its contribution.

However, since the tax income trend for the “furniture and appliances” category before the Apple store opened was flat, it appears that all of the increase after August 2011 can be attributed to the Apple store.

Download (pdf) the entire city economic report, which is based on the latest sales tax information from the state.

This graph created by the city shows sales tax revenues generated by the Fourth Street shopping district, broken out by the various types of retailers. The arrow has been added to indicate the August 2011 grand opening date of the Apple store, and how sales tax revenues spiked for the category starting on that date. No other district or category in the entire city had a similar increase.

This city-produced graph shows the contribution of the various categories within the Fourth Street district. The “furn/appl” category in red shows that the Apple store and an unknown number of other stores contributed 23 percent of the total along Fourth Street.

 

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