April 2004

Sr. V-P Retail Ron Johnson accepted an Award of Excellent on behalf of Apple at the annual conference of The Center for Design and Business in Providence (RI), and also gave a 40-minute talk to an audience of 500 about Apple’s retailing strategy and philosophy that revealed some additional details about the store’s creation and future. He confirmed the Regent Street (London) store will be two stories, and revealed it will be 75-feet wide. He said Apple will restore the original façade of the building, and then retain the look and architecture when installing the store. To be clear, Apple is just one of 5 retailers in the block-sized building owned by The Crown (the Queen), and there will be residential and office tenants in the building as well.

He said the company had been trying to find a suitable space within the Providence Place mall for almost a year, but so far no suitable spaces have opened up. He said Apple will eventually locate a store in Providence.

On other subjects, Johnson said the retail stores automatically report visitor traffic every 15 minutes, and revenues every 4 minutes via a Web-based interface, allowing Apple execs to constantly monitor the effect of new products and other sales announcements in the stores. He said Apple’s stores were the fastest retailer ever to reach $1 billion in sales (3 years), beating out previous record-holder The Gap, who reached that revenue level in 4 years. Interestingly, about an hour later at the annual stockholders meeting, President Steve Jobs said the company was still checking with Gap CEO Mickey Drexler on that statistic. Johnson said the stores average just over $3,000 in revenue per square foot per year, which is "really good," and he noted that the busy Tyson’s Corner mall averages about $600 per square foot. He forecast the retail stores will generate $1.3 billion in revenues and about $30 million in profit. Lastly, the company estimates that 100,000 persons a week come to the Genius Bars–a very popular place!

Even as some Apple resellers picketed the company’s annual stockholders’ meeting back home to protest pricing practices and competition, in answer to an audience question Johnson acknowledged the resellers, saying they’re "loyal" and, "have given their lives to market Apple products." He said, "Their belief is that when the Apple store comes to town, it’s actually going to take away from their business." Apple has been trying to convince them that a successful Apple retail store creates more business for everyone. In fact, Johnson said, only two resellers have closed since Apple opened their own retail stores, and Apple products are sold in twice as many stores now as when the stores first opened. "We studied the markets where we had stores, and how the channel does compared before," he said. "The channel does better with stores than without."

The "Providence Journal" has a story (reg. required) on Johnson’s talk, which hits some of the high points.

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