Information provided by sources reveals there are few common factors among Apple’s highest-grossing stores that might explain why their revenues or sales of service-related products are at the top of the charts. Instead, each store has its own operations and revenue personality, dependent upon the staff, customers, regional demographics, size of the store, and to some extent the region where the store is located. Categorizing a specific store, or trying to copy a store’s success to others is very elusive, say those in the know. For example, the chain’s top performers in the United States include the Tysons Corner (Virg.) store, the first store to open back in 2001. But other successful stores have been open less time, are both large and small, and are scattered across all regions of the country.
The newest store with the best overall performance is La Cantera, reporting over $6 million in revenue for the latest quarter. Conversely, the Wellington Green store is the oldest store with the least revenues, tallying just $1.9 million.
But top revenues don’t necessarily ensure increased revenues compared to the same quarter of 2006. Among the top revenue producing stores, the increase from 2006 ranged from just 7 percent to 27 percent. Many other younger stores had more significant gains, those with knowledge say.
Similarly, the sales of CPUs doesn’t seem to be linked to high sales of AppleCare, the sources note. The stores that sold the most Macs during the quarter were among the bottom 25 percent of AppleCare sellers.
Attach Rates
There doesn’t seem to be a pattern of which stores excel in selling .Mac, although the highest rates of ProCare sales seem to be slanted towards older stores. Apple execs have said there are over 100,000 ProCare members and 270,000 subscribers to the One to One service, and over 1.7 million .Mac subscribers.
The newest stores in the chain are naturally lagging in revenues, as the continue to attract new customers, and former ones return for add-on purchases. However, the newest stores lead the others in sales of AppleCare, .Mac, ProCare and One to One service.
On a regional basis, the population-heavy northeast United States leads the U.S. stores in revenues, followed by the southwest region, which includes California with the most stores.
Regionally, AppleCare is sold most commonly in in the midwest and mid-Atlantic states. The south-central states lead in in sales of .Mac, ProCare and One to One service. There is no obvious explanation for either figure, the sources say.
Is Small Better?
Apple’s nine mini-stores lag behind the performance of other stores in the chain. In fact, six of the mini-stores are among the bottom 13 stores ranked for overall performance. Understandably, their revenues don’t match those of full-size stores. However, their attach rates are also well below average for the chain, again, with no obvious explanation.
Even further, the bottom three stores in overall performance are mini-stores, dragged down by their low revenues, but even more by their relatively low attach rate scores.
From Day One
Then how are individual stores performing? Sources have provided information that allows some limited insights into selected stores.
A typical mall store is the Twelve Oaks store in Detroit (Mich.), which opened in August, 2002. It features a 30-foot storefront and about 6,500 square-feet of retail space. The surrounding region is upscale, with an average household income of $87,481, according to the developer Taubman Centers Inc.
Apple signed a 10-year lease on the space, paying about $85 per square foot, or an expense of about $140,000 per quarter. The store cost about $1.3 million to build and outfit.
Sources said the store generated about $5 million in revenues for the third quarter of fiscal 2007, an increase of over 50 percent from the same period of 2006. The store ranked in the top 25 percent in computer sales, but in the lower 50 percent for iPods. It’s sales of AppleCare, .Mac, ProCare and One to One were in the middle third of all stores.
Understandably, the newly-opened Fifth Avenue (NYC) store has more impressive numbers. The store is located along an upscale section of Fifth Avenue adjacent to Central Park. Construction documents indicate it cost over $5 million to demolish the old plaza and build a new two-story structure. That cost does not including the glass cube, which reportedly cost $9 million to design, construct and install. Overall, the store might have cost Apple $20 million to build and outfit.
The store includes an underground retail floor of nearly 10,000 square-feet, and an identically-sized floor below it for offices, storage and other spaces. In total, Apple leased 22,500 square-feet beneath the plaza.
Apple reportedly signed a 20-year lease for the space with building owner Harry Macklowe, who personally approached Steve Jobs to solicit an Apple store on the site. Based on real estate sources and Apple’s financial reports, Apple is paying a bargain basement price of about $100 per square-foot on the Fifth Avenue store lease, or about $2.3 million a year. Some retail space in the area goes for upwards of $1,000 per square-foot.
In return for almost three years of work and millions of dollars, Apple received a bonfide New York City attraction for both tourists and locals. They also created a money machine that is on-track to deliver over $200 million in revenues over the next year. Expenses for the 24/7 store are higher, but not enough to offset its profitability.
As for sales of ProCare and other products, retail sources say the Fifth Avenue store isn’t a stand-out. The store, open since May 2006, is among the bottom 10 stores in overall attach rate performance.
Without Apple’s own spreadsheet full of live store data, and some statistical expertise, it’s impossible to tell what creates a successful store–or a loser. Instead, we’re left with tidbits of information and the company’s quarterly reports, which are showing nothing but success for the retail stores.
