Opening retail stores outside the United States is more complicated, according to Apple CFO Peter Oppenheimer, who answered questions during this year’s Citicorp Global Technology Conference in New York City. In other remarks, he declined to characterize the pilot computer sales program with Best Buy, saying it was just 45 days old, but he did tackle a question about possible tension between the company and authorized resellers.
Asked why Apple was not opening international stores more quickly, Oppenheimer explained that the United States pioneered the mall concept back in 1958, and so there are “thousands” of malls and locations from which to chose. In other countries, there is less retail space, tenant turn-over tends to be less, and street-level stores sometimes face design restrictions. “So it’s more complicated outside the U.S.,” he said.
Oppenheimer reminded the crowd of analysts and media that Apple had opened its first international store just three years ago, and that “roughly one-quarter” of this fiscal year’s new stores would be outside the U.S., or about 10 stores He reiterated what other Apple executives have said, that the company will continue to open stores at a “measured and controlled pace.”
When asked if the company was worried about Dell Computer’s apparent entry into retail, Oppenheimer replied, “We’ll just have to see what their stores look like.” He noted that Apple stores have product stock and Genius bars, and are “very busy,” referring to Dell’s strategy, which is nearly opposite.
Oppenheimer said there are “in the range of a dozen” Best Buy stores participating in the pilot program to sell Macintosh computers. Best Buy has long been a reseller of iPods, but Apple has been reluctant to have them sell computers. He declined to say how well the sales program is performing based on just 45 days of experience. “Both companies are continuing to evaluate it,” he said, adding that Apple already has a good relationship with Best Buy based on their iPod sales.
An attendee asked Oppenheimer about possible “tension” between the company and retailers as Apple continues to open its own retail stores. “We are locating our retail stores in very high traffic locations,” he replied, “either the best malls or very busy city streets, and high-traffic areas, and are paying for that level of real estate.”
He said the original and continuing retail store strategy is to grow the Mac platform. “We did not build the stores to cannibalize channel sales–that just wouldn’t make sense,” he explained.
One of Apple’s measures of retail success, Oppenheimer said, is that about half of the Macs sold in stores are to people who are new-to-Mac. “You know, we’re now entering our fifth year of retail. We’re selling hundreds of thousands of Macs per quarter in our retail stores, and you would think that ratio would go down over time. But it really hasn’t. From the time that we opened the stores, it’s really been from the low 40 percent range to the 50 percent range.”
Oppenheimer explained that an independent, third-party research company surveys a sample of retail store customers each quarter to determine their previous computer use and other information.
“Again, I think it’s because the reputation of the stores, the high service culture. It’s really resonating in the communities, and people are telling their family and friends to go to the Mac store, the Apple store, and have a great experience,” Oppenheimer concluded.
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