Amid the announcement of very positive quarterly financials results for both Apple and its retail stores today, company executives revealed a major change in how retail profit and loss will be reported starting in fiscal 2015—the company will no longer break out the results separately. Instead, retail store financials will be reported within the company’s existing geographic segments, ending the 13-year practice of allowing investors and analysts to judge the figures and make quarterly comparisons. Executives didn’t immediately explain why they decided to cloak its retail store financials, and if other figures such as the number of employees or store visitors will continue to be reported. During a conference call with analysts, CFO Luca Maestri said Apple generated overall revenues of $42.1 billion in the quarter and a profit of $8.5 billion. The retail stores posted revenues of $5.133 billion, up substantially over both the previous quarter (25 percent) and the same quarter of FY 2013 (15 percent). Maestri failed to provide the routinely-provided retail segment’s profit, perhaps a lead-in to the future reporting change. details
Two years after pushing the boundaries of the Apple store region northward to include Sweden, the company is making plans to expand the chain into the adjacent country of Finland, the most sparsely-populated country in the European Union. In fact, with just 5.5 million residents, Finland would be the smallest country on earth with an Apple store among the 15 countries now being served. According to sources, Apple is taking steps to prepare its point-of-sale (POS), personnel scheduling, Concierge and EasyPay computer systems to operate in the country, including software translations into Finnish. The next steps would be to establish a legal presence in the country, locate appropriate real estate for a store, and arrange for store construction. Finland has very well-developed technology and science industries, supported by a highly-educated workforce. Also, the country’s average Internet connection speeds are among the Top 10 worldwide, helping make computer and smartphone use nearly universal. And the country’s average disposable income is above the EU average, making it an attractive sales location for Apple. Because the Finnish store plans are so preliminary, it’s unclear where or how soon a store would open. However, it’s likely the first store would be in the Helsinki region, and it could open in late 2015.
In a unusual but understandable twist, the Apple Watch made its retail store debut not in one of Apple’s own stores, but under glass inside a Collette fashion store in Paris on Tuesday. The public event included invited guests from the world of fashion, Apple Sr. VP Design Jony Ive and newly-hired designer Marc Newson. It’s the first time the company has used another retailer to pre-promote a product and, significantly, was Apple’s first entrée into the world of fashion retailing. The Apple Watch won’t be available until early 2015, and there’s wide speculation about how and where it will eventually be sold. However, it’s nearly unanimous the watch will have to span both the tech and fashion worlds in order to succeed, explaining its appearance at Collette. That tech-fashion connection was foretold by the hiring of former Burberry exec Angela Ahrendts and former Nike social media guru Musa Tariq earlier this year. All three collections of the Apple Watch were on display under glass at a single wood table, similar to the Fetzer-made display tables used at the Apple stores. The watches were held upright by curved and polished steel rods. Tiny brass plugs filled holes in the wood not occupied by a watch. The one-day display attracted a long line of the curious during the city’s fashion week, including a few who were allowed to try on an Apple Watch. The display also generated a Tweet by CEO Tim Cook, “Amazing to see the excited crowds today in Paris to preview Apple Watch for the first time.” photos/video
The Fifth Avenue Apple store in New York City is arguably the most iconic retail space in the world, and a new book describes how it was the collaborative creation of two great—and sometimes contentious—personalities: George Macklowe representing real estate and Steve Jobs representing technology. The store’s success was nearly immediate, since it attracted 50,000 visitors a week after it opened in 2006, and generated $1 million in daily. Macklowe sparked the idea for an Apple store on the plaza of the General Motors Building on Fifth Avenue, and “pestered” former VP Real Estate George Blankenship for a meeting with Jobs, the books says. Eventually Macklowe was invited to a meeting with Jobs, but they developed completely different designs for the store’s entrance. Macklowe wanted a 30-foot glass cube set at the front property line next to the sidewalk. Jobs’ version of the entrance was 40-feet tall and set in the middle of the plaza. Macklowe ordered full-size replicas built on the site using scaffolding for a secret midnight evaluation. When Apple’s real estate design team saw the two sizes compared, they realized that Macklowe’s smaller glass cube was the correctly proportioned design. It took just 30 minutes for the companies to complete a deal, the book says. Macklowe then convinced several existing retailers beneath the plaza to move to accommodate Apple—”I did them favors; they did me favors,” Macklowe told the author. Later, Macklowe’s real estate attorney lamented that he had negotiated such a “horrendously low” percentage rent with Apple. But back then no one was sure how much business the store would do. As it turned out, customers were spending $1 million a day in the first year of operation. Read an excerpt of the book “The Liar’s Ball: The Extraordinary Saga of How One Building Broke the World’s Toughest Tycoons.”
After working 10 months to obtain construction permits for a landmark retail store in downtown San Francisco, Apple is now trying to convince the city that seven tulip trees need to be removed from the side of the building before construction can begin. But even with a company promise to eventually replace the trees after the store is finished, officials of the city’s Department of Public Works were skeptical of the proposal during a hearing earlier this week. Apple intends to demolish a large existing building on a corner parcel overlooking Union Square, and construct a huge, cantilevered glass structure with two levels of retail space. The trees would be obstacles for construction equipment on one entire side of the site, the company said, and a hired aborist told the hearing officer the trees were not in good health and needed replacement anyway. But a DPW spokesperson has said the tree are mature, healthy and should be retained. Apple submitted plans (pdf) for the store last year that included landscaping information, including new trees around a refurbished public plaza at the rear of the proposed store. San Francisco is very serious about its street trees, and requires permits for trimming or moving them, and fees for removing them. The process includes a city inspection of each tree requested for removal, posting of a removal notice on the tree and a 30-day comment period. Any public objections generate a public hearing. In any case, a DPW hearing officer makes a recommendation and the Public Works direction makes the final decision—which itself is appealable. It’s not clear how long the hearing officer’s decision will take. Demolition has not yet begun on the existing building, but when complete it could take a year of construction before the new store opens.
A former professional basketball player was arrested Friday by police in Arizona, charged with stealing $14,000 in Apple products by pretending to make EasyPay product purchases with his iPhone, and then simply walking out the store. Rex Chapman, 46, visited the Scottsdale Quarter (Phoenix) store seven times over the summer, police say. He would take out his iPhone, pretend to scan product bar codes, and then confirm an EasyPay transaction. He took the stolen items to a pawn shop, police claim, and exchanged them for cash. Police investigators arrested him without incident while was driving his car, but didn’t say exactly how the theft was eventually detected. Investigators did say that the crimes came to light last month, and that several employees recognized Chapman because of his sports status. Chapman played NBA basketball from 1988 through 2000 and reportedly earned $22 million during his career. Apple debuted the customer version of EasyPay in November 2011 to counter criticism from customers, mostly well-informed, ready-to-buy types with no time to track down and deal with a Specialist. A buyer simply opens the Apple Store app, scans the product’s barcode, and confirms payment using their existing iTunes credit card information. The process takes just seconds, but is limited to items under $125. An EasyPay purchase alert immediately appears on the iPad screen of a store employee working “point.” However, absent any observed irregularities, EasyPay buyers are never asked to display their on-screen receipt when leaving the store. In fact, an Apple retail senior director once famously testified in a lawsuit that the stores didn’t have a theft problem and loss prevention was not a high priority. It’s that ease-of-purchase procedure that apparently allowed Chapman to take out several high-priced items on each visit that would have been impossible to purchase via EasyPay because of the price limitation. Chapman faces nine counts of organized retail theft and five counts of trafficking in stolen property, all felonies that include prison sentences if he’s convicted. Update: Here’s a list of the dates and amounts of the alleged thefts. Police later released an Apple store video surveillance clip which police say shows Chapman in the Scottsdale Quarter store. video
The days of enthusiastic overnight lines for the opportunity to buy one of Apple’s new products now seems overwhelmed by line-sitters hoping to buy iPhones and turn them into instant cash. This year’s debut of the two iPhone 6 models created overwhelming crowds, with hundreds in line at smaller stores and almost 1,900 people by one count at the high-profile Fifth Avenue (NYC) store. The lines were divided by store staffers into two camps: those who had purchased on-line and came to pick up their iPhone 6, or walk-ins. That latter category, supplied with cash by mystery men, seemed to be the un-enthusiasts. There was true Apple loyalty and excitement at most stores. CEO Tim Cook threw open the front doors of the Palo Alto (N. Calif.) store, while Sr. VP Retail Angela Ahrendts attended the debut at the George Street (Sydney) store. But it was perhaps New York City that epitomized the trend of moving from true product enthusiasm to financial gain, created by a staggered country roll-out and under-supply of the iPhone 6, which creates an opportunity for third-party profit. Based on that financial model and using purchase techniques honed in China and Hong Kong, ordinary people at the SoHo and Fifth Avenue stores—and at many others—were offered hundreds of dollars if they agreed to sell the iPhone they had waited days in line to buy. Those middlemen will then make thousands selling the smartphones to exporters who quickly send them overseas where the iPhone 6 models are not yet available.The practice has been common abroad for years and occasionally seen in the U.S. But this year’s waiting lines seemed to ratchet up the scalping, as documented in a video by Casey Neistat. His six-minute video profiles the SoHo waiting line, the heavy police presence, an arrest, and how the phones were bought two-at-a-time with cash and then handed off. Apple took action after similar paid line-sitting sprung up in China and Hong Kong for new iPhone 4 models. To combat the practice, the company created a on-line purchase, in-store pick-up requirement in China that ended fights among scalpers and broken store windows. More significantly, the purchase requirements ended the independent entrepreneur activity in front of the Apple stores, which the Chinese government generally finds inappropriate for its economy. video/photos
With the introduction of the latest version of its flagship iPhone product, Apple’s window display team has come up with a creation that is both eye-catching and subtle. The display is the latest in a series of displays that have won industry awards and fascinated passersby. For the iPhone 6/Plus debut, the designers created displays for the left and right windows using the same principle, but with slightly different structures. The displays consists of frames constructed of metal tubing, sized to the same proportion as the iPhone 6 models. The frames are painted in the three iPhone colors—gray, silver and gold—and in intermediate shades of those colors. The frames are spot-welded to one another, and mounted in a 10 degree rotation, creating a hypnotic circular structure. In the left window, the size of the frames changes during the rotation. In the right window, the frames are all the same size. As is typical, in front of the display there is a stand on which the two iPhone 6 models are mounted. Black lettering on the window calls attention to the products. Both displays are lit from three LED fixtures sitting on the floor, arranged to sequentially light the frames and highlight their colors. photos
It may be all anticipation and excitement for customers in-line for this Friday’s debut of the iPhone 6 models, but leaked documents reveal publicly for the first time how meticulously Apple plans such events to create a superior purchase experience. Screenshots of Apple’s plans posted by 9to5mac.com show there will be two lines: one for walk-in and another for Personal Pickup, both greeted by employees who are required to have taken the “Engaging Customers in Line” training class. Walk-in customers will receive an electronic Reservation Pass for their iPhone purchase, or a physical card as in previous years. Personal Pickup customers must have received a “Ready for Pickup (RFP)” email, the documents state. When the stores open at 8 a.m., the “Customer Journey” begins. “Provide a warm welcome and pair each customer with a specialist,” Apple tells its employees. The specialists should then, “Share enthusiasm and present a complete solution. Position accessories, Reuse and Recycling and AppleCare.” Employees should re-open the Genius Bar for appointments “when the majority of inventory is out of stock,” the documents say. The event plans also include instructions for when the waiting line disappears. “Remove the stanchions promptly if not required based on the line size.” photo
Apple’s annual product announcement this morning included products and features that will impact the company’s retail stores, including a larger iPhone with mobile payment features, and an Apple Watch that will require stocking and display space for 34 different configurations. Both products will rely heavily on the retail stores to demonstrate their adaptability to customers’ hands and wrists, much like the iPad required hands-on use when it debuted. The much anticipated event in Cupertino was attended by over 2,500 people representing the media, Apple employees and special guests, and ended with a performance by the band U2. Angela Ahrendts, Sr. VP Online/Retail Stores was photographed talking to Apple staffers near the demonstration building after the keynote. details
One month after construction on the future Princes Street (Edinburgh) Apple retail store seemed to be finished and the entire staff was hired, sources say the process is nearly back to square one. Instead of holding its grand opening in time for the city’s annual Festival, Apple’s traditional white grand opening barricade erected on July 10th still surrounds the store, with graphics that had to be replaced once because of weather damage during the delay. According to insiders, as of late Wednesday evening the interior of the city’s first Apple store was under major construction, with workers on scaffolding erected at several locations. More significant, none of the construction work appears to be near completion, witnesses say, despite nearly 24-hour work schedules. The current interior contrasts with just one month ago, when the wooden furniture was in place and the store interior had a finished appearance. The store’s staff also appears to be on hold. Candidates were interviewed and staffers were hired back in July, and they expected to begin work by month’s end. But now they’e been told to sit tight and await a telephone call from Apple, which a source says may not come for another six weeks. In the meantime, the staff continues to work their previous jobs or otherwise earn a living. One source has said the delay is partly due to an issue with the store’s flooring, which is likely the new terrazzo variety. The delay is among the longest in recent times, and mirrors the push-back of the Hanover (Germany) grand opening from last month, which sources say was caused by ground-water problems, mold and associated issues.
A southern California mall developer has posted a tenant map that includes a space labeled “Apple,” along with the notation “in discussion,” indicating a possible future store northwest of Los Angeles. The map appears in the leasing brochure for The Collection at Riverpark (Oxnard), a 650,000 square-foot mall is along State Highway 101, the main coastal link between Los Angeles and San Francisco. If the new store becomes a reality, it would fill in coverage north of the existing The Oaks and Simi Valley Town Center stores, and south of the State Street (Santa Barbara) store. Alternatively, the store might replace the existing Simi Valley store in the wake of waning mall visitor traffic at that mall, which has sparked a major redevelopment. Apple has previously relocated stores when the hosting malls suffered traffic losses, although usually the alternate location is much closer than 25 miles, as in this case. It’s not clear when the lease negotiations might be finalized or when the store might open. mall plan/map
In the legal battle over whether Apple has denied its retail store employees their breaks, a picture is emerging of the individual store personalities in California, along with photos of the some of the chain’s largest and most amusement-filled break rooms. In written declarations by store employees, store visitors were described as “upper class,” “very demanding” and “laid back,” and employees at the Palo Alto store said they had to stay on their toes for potential visits from headquarters staff. The lawsuit by former and current California store employees was filed in 2011 and was just recently certified for class-action status. In thousands of pages of legal documents filed with the court, Apple presented the declarations of current store staffers, who swore the company rigorously follows California’s labor code to make sure each employee receives their required rest and meal breaks. In those declarations, supervisors frequently profiled their stores, and provided staffing, visitor and revenue information. In another set of documents, Apple itself provided the court with photos showing rarely-seen views of store break rooms, some equipped with healthy-food vending machines. details
With its primary 10-year lease expired and its enclosed storefront blocking a view of the interior, the North Michigan Avenue (Chicago) store may be scheduled for replacement, according to city real estate sources. A story by Chicago Business says Apple’s real estate scouts are seeking a new location along the Magnificent Mile either to replace the existing store or to generate “leverage” in talks to extend the 10-year lease that expired last year. The two-level store opened in June 2003, and was the third high-profile store in the chain behind SoHo (NYC) and The Grove (LA). Despite the store’s age, it still sparkles architecturally: a wide glass-staircase, a roof-top training room overlooking an unusual green-roof garden, and a unique Apple-shaped cut-out in the front stone façade. The store’s location is also prime, situated along the city’s main shopping street. Some of the new locations scouted include 717 and 830 N. Michigan Avenue, just one and two blocks north of the existing store respectively. The story quotes former Apple store assistant manager Tony Marengo saying the store is “impressive but it’s no longer the jewel of the avenue.” Marengo now owns MacTutor Inc., a training company for Apple products. property details
A customer of the Pioneer Place (Ore.) Apple retail store who purchased some earbuds last month has set off a debate after he posted a Facebook entry claiming a store employee entered a slur in the place of his email address, and it printed on his purchase receipt. The Facebook posting generated Tweets, and eventually the attention of the Oregon Live Web site, whose stories attracted comments representing a wide range of opinions on how the slur might have been generated. Adam Catanzarite says the email address “firstname.lastname@example.org” appeared in the usual location under his name on his paper copy of the receipt for the earbuds. In fact, Catanzarite says, he declined to provide an email address when asked by the Apple store employee. He left the store and paid no attention to the receipt until days later, he says. Catanzarite then contacted a manager at the store to complain, but says he received no satisfaction. He then went public with his complaint. Catanzarite identifies himself as queer, and works at the Cascade AIDS Project as an HIV prevention specialist. receipt