International Store Outlook

Apple confirmed at the Regent Street (London) store grand opening that it intends to open more retail stores in Europe. But where will Apple strike next?

During a mid-2008 conference, CFO Peter Oppenheimer said Apple was on-track to open about 35-40 during fiscal 2008, and that a larger percentage of those would be international, compared to previous years. As of early August, Apple has definite plans for first-ever stores in Germany, Switzerland, France and Mexico, and additional stores in Australia, Canada, China, Canada, Ireland, and the UK/Scotland.

As Apple moves forward into Europe and other countries with different cultures, they will need to consider:

  • Will Apple's stainless steel architecture have to take a background to the historic buildings of other countries?
  • In Japan, Apple uses English almost exclusively. But other countries may not embrace English, preferring to see their own language used in store signage.
  • Apple will have to balance the cost of constructing a store, recruiting a suitable staff, and operating the store against the potential revenues, which in turns depends upon the registered Macintosh community, median income, currency trends and general retailing environment--just like at home!
  • The local retail tax schemes (check this chart)

    The International Council of Shopping Centers has an awards program that identifies exceptional shopping developments around the world, which is a great place to research possible future Apple store locations. Check their Web page for the various geographic awards.

The following chart summarizes the possible international stores sites as of Sept.. 2006, listed in no particular order. Feel free to provide me feedback , or start a topic on the forum.


Country

Background

Retail Status

Currency
Trend

Internet
Index

PC
Index

GDP
Index

Locations

China

Apple revealed in 2004 that it was investigating a retail store in China, and the country's 2005 entry into the World Trade Organization has hastened the plans of U.S. retailers through decreased tarrifs and the ending of business investment restrictions. China's adoption of technology has skyrocketed during the past five years, and improving economic conditions have created a middle class of retail consumers that might be hungry for Apple's products.

An Apple Center is located in The Malls at Oriental Plaza (Beijing), owned by a Hong Kong businessman who also own two Apple Centres in Hong Kong.

There are only two authentic shopping malls in the country, leaving high-end international retailers to occupy street-level spaces in only a few selected locations. The base of potential customers (pop. 1.28 billlion) is too huge to ignore. Status: Apple admits it has investigated China; first store opened in July, 2008 with second store scheduled for 2009. Shanghai store planned, other unknown cities possible.

Yuan, flat (regulated)

79.5

--

7.2

The Malls at Oriental Plaza in Beijing; Nanjing Lu or Nanjing Xi Lu in Shanghai. First store opened at The Village at Sanlitun, with second store slated for Qianmen Road.

Germany

The country's first two shopping centers were developed in 1964, and both continue to be among the most important retailing locations. Most shopping centers were in outlying areas until about 1985, and more recently inner-city centers started to appear, particularly since the wall between east and west came down. New centers are now focused on the inner city, and often include entertainment venues, such as movie theaters.

Prime retail space is difficult to find and very expensive. Germans are generally very price conscious, making Apple an unattractive option. Tech-savvy population that seems fed-up with a Windows solution could create lots of customers.

Electronics dealer Saturn is creating store-within-a-store areas for Apple products, similar to CompUSA stores in the U.S.A.

The original West Berlin retailing locations are still hot, but East Berlin retailing spots are also sprouting up. Düsseldorf draws from Holland & Belgium shoppers. Status: for sure, with first store opening in Munich late 2008.

Euro, down

39.0

33

30.5

Kurfürstendamm, Friedrichstrasse, Kantstrasse, Potsdamer Platz, Hackescher Markt (Berlin); Munich; Hamburg; Königsallee in Düsseldorf. First store on Rosenstrasse near Potsdameer Platz.

Switzerland

In a June 12, 2005 on-line article of FACTS magazine, interim CEO of Apple Switzerland Ltd. said the company will open a store in Zurich. In July 2007 Adrian Schmucki, Apple Switzerland GM told a university lecture "soon" but provided no details. updated

Status: planned, with first store in Zurich on Bahnhofstrasse opening in 2008, with Geneva store planned for Rue de Rive in 2009.

 

2.5

49

32.5

Bahnhofstrasse

France

Sr. V-P Retail Ron Johnson identified the Champs Elysees in Paris as a key retailing location (along with Ginza, New York and North Michigan Avenue), and it's know Apple has been investigating locations along the street. It would be an expensive venture, probably involving an extensive renovation or even a complete reconstruction. But the street is not only a retail target for the French, but also for millions of tourists year-round.

No non-food sales on Sunday (except tourist areas), and work week is limited to 35 hours (although law being revised in Feb. 2005).

Shopping malls are in the suburbs of Paris, but most retailing is in single, street-level spaces; international retailers huddle along the Champs Elysees. Status: lease signed for Louvre location, other Paris locations planned.

Euro, down

21.9

29

29.3

Anywhere along the Champs Elysees in Paris; also Marseille, Lyon, Toulouse, Nice.

Italy

Like many European countries, retailing basically remains a non-chain, family endeavor. Similarly, finding the right space and the right size in 400 year-old buildings would challenge Apple's architectural standards.

International retailing is centered in Rome, and then is scattered across the old city by type of product. There are just a few areas that combine the space, the tourists and the buzz for an Apple store. Status: Done; Rome Est store opened March 31, 2007.

Euro, down

18.5

17

28.7

Via Condotti, Via del Corso in Rome; Milan

S. Korea

About 30% of population live in three cities, and most in dense apartment blocks, making South Korea the most-wired country in the world: 76% of households have broadband, in some cases up to 20 Mbps. The country is a major manufacturing and component assembly site for every major electronics company, including Apple.

In last stage of full liberalizatin of foreign retail investment rules. But political issues with China keep the economy off-balance, and foreign retail investors remain wary. In general, retailing is enjoying a general upward trend. There is continued consolidation of smaller outlets, and Wal-Mart will soon open in the country. Status: possible

 

29.2

26.7

20.5

COEX Mall, Dongdaemun Market, Namdaemun Market, Myeongdong, Itaewon, Apgujeong

Scotland

Shares many of the same demographics with England and Wales on Internet use, broadband, affluence, etc. Glasgow is second-fastest growing city in the UK.

JustMac reseller has a Glasgow store offering sales, support and repairs. An Apple store in Edinburgh or Glasgow would round out Apple's UK distribution of stores. Status: first store opened in Glasgow on Buchanan Street, August, 2007, store planned for Princes Street in Edinburgh during 2009.

pound

Buchanan Street in Glasgow, Princes Street in Edinburgh; East Kilbride and Braehead shopping malls (Glasgow)

India

The economy, distribution of income, social classes and education are very specific to India, making it a very tough market for expensive consumer electronic goods. Average household income is estimated to be less than $4,000 for 90% of households, compared to $956 for a 60 Gb iPod. Nevertheless, there is a growing middle class with disposable income and the education to use a personal computer.

About 95% of retail operations are individually owned and family operated. Shopping malls are a very new concept--the country's first mall (Crossroads) opened in 1999. Sony and other electronics companies have identified India as a target market and will expand their presence there.

In July 2005 politicians are hotly debating a proposal to open the retail segment for foreign investment through a 5-year phased ownership plan.

The first Apple Centre opened in March 2004.

Status: possible

Rupee, up

18.4

--

3.3

Delhi

Brazil

The country's first suburban shopping mall wasn't developed until 1966, and up until about 1985 were considered to be only for the rich. That was the year that Center Norte was built in Sao Paulo, drawing families, office workers and other diverse groups of shoppers. The country's unstable economy, difficult long-term financing at low rates, and customs barriers have delayed the entry of foreign companies into the local retailing market.

The Brazilian retail industry has been whip-sawed by a currency devaluation (1998-1999), an energy crisis (2001) and political instability. An increase in credit cards has fueled some recent retail growth, and trade treaties become effective later this year could boost retailing even more. Status: not likely

Real, up

14.3

--

8.5

  

Taiwan

Apple distributor Blue Apple has opened one store in Taipei, and will open two more. 7-Eleven stores sell iPod minis.

Increased use of credit cards has boosted retail sales the last two years. But a flood of new shopping centers were built in 2001, creating an oversupply of retailers that has now slowed full development of shopping center retailing. Big, old-time retailers still dominate the market, but franchise stores are beginning to get a toe-hold. TV home shopping networks and Internet sales are an important retailing channel. Shoppers are generally tech-savvy and have disposable income. Political issues with China continue to periodically sway the country's economy. Status: possible

Dollar, up

11.6

--

   

Spain

 

Retail sales were affected by Sept. 11th and the Euro conversion, but also more lately by changing demographics that have pushed for extended retailing hours. Lower interest rates, increased household income and improved employment has created more disposable income. But more recent economic issues seem to have slowed retail expansion and spending. Status: possible

Euro, down

9.7

14

22.0

Madrid Xandadu

Australia

This westernized, high-tech country is huddled along the coast--and in front of their Macintosh computers. The continent is a key destination for Asian Pacific tourists, increasing the country's attractiveness for retailing international brands. The Sydney metro area sports a relatively large number of authorized Apple dealers, who provide service, support and a place to go hands-on with products.

Warehouse-type shopping has become more popular, but major shopping centers and strip malls are still important retailing spots. Low interest rates and low unemployment have increased disposable income. The Aussies are ready for at least one Apple store in the country, and the tourists will spread the word back home. Status: first two stores opened in July-August, 2008 in Sydney (George Street) and Chatswood Chase mall).

Dollar, flat

9.4

45

29.0

Central Sydney: Bondi Junction mall or Pitt Street Mall; on Pitt Street, Castlereigh Street or Oxford Street. Suburban Sydney: Newtown, Paddington, Blamin, Manly areas; cities of Parramata, Liverpool. Others: Melbourne, Victoria (Gelong, Carlton areas), Adelaide, Brisbane.

Malaysia

Malaysia's economy has been improving since 2003, along with consumers' disposable income and spending, the latter up 7% in 2003. The country is dominated by small traditional convenience and neighborhood stores, but economic growth has encouraged local and international retailers to introduce Western-style retail outlets. Hypermarkets are becoming popular, with Correfour, Giant and Tesco competing for customers. The future economic outlook is positive, with retail sales up 6% to 7% annually.

Status: possible

Ringgit, flat

8.6

--

9.0

Bukit Bintang Plaza, Mid Valley Megamall in Kuala Lumpur

Netherlands

The Netherlands is Europe's most densely populated country. Dutch consumers are value-conscious but affluent. Several Apple Centres in the country, including the Mac House in Amsterdam.

The economy has been in a two year slump, and consumer confidence fell to a new low, all affecting the retail segment. There is plenty of secondary retail space available, but prime spaces are more difficult to find. The economy is expected to grow slowly this year. Status: possible

 

8.5

 

28.6

P.C. Hooftstraat area

Indonesia

 

The recent tsunami, fragile economy and politics makes future retail investments by international companies unlikely. Status: impossible

Ruphiah, down

8.0

--

3.2

  

Russia

 

The Internet score is misleading--most users are probably spam and scam creators. The country's unstable political and ecnomic situation make retail investments dicey. Status: impossible

  

6.0

--

8.9

  

Thailand

 

Unlike many other countries, the retail segment provides a significant 43% of consumer spending, although most is focused on food-related spending. Retailers are moving from small, independently-owned stores to big-name chains in the clothing, leisure and recreational products area. Retail spending and the number of retailers is expected to continue increasing. Status: not likely

Baht, flat

6.0

--

7.4

 

Sweden

Macoteket Apple Center - Stockholm

Status: possible

 

5.1

39

26.8

Stockholm

Argentina

 

Retail purchasing on credit has increased since 2003, and time payment has also increased. The economy is generally improving at a steady pace, accompanied by rare political stability. Status: not likely

Peso, flat

4.1

50

11.2

 

Phillipines

Retail shopping has shifted to shopping centers only during the past five years, and almost only in Manila. The government liberalized foreign retail investment in 1999, sparking interest from many retailers. At the same time, mall are becoming not only shopping destinations, but also entertainment destinations (theaters, bowling alleys, amusement parks, etc.).

The first reseller in Cebu opened in July 2005. The iStore has a glass storefront, and many familiar interior features. [photo #1 #2]

Status: not likely

Peso, down

3.5

--

4.6

  

Belgium

Centrally-located country within Europe and among the most affluent countries in the world. Large number of Internet users and high percentage of broadband connections. Brussels is home to many international organizations and hosts visitors from around the world.

Status: Network of resellers already in place, including MACI (iMac backwards) and MacLine. Apple has corporate offices in Ghent, but that doesn't seem to have influenced their retail siting decision. Possible

 

3.4

22

29.1

In Brussels at Chaussee d'Ixelles area or City 2 Mall; in Antwerp at the Wijnegem Shopping Centre

Hong Kong

The history and culture of Hong Kong is based on retail and shopping, but it wasn't until mid-1960 that Ocean Terminal was developed in Kowloon to bring the concept of indoor, centralized shopping to the city. Several other large centers have been built since the 1970s, and retail is now focused on the young and trendy consumer interested in electronics and gadgets.

Several Apple Centres in the city, including at the International Finance Center and Causeway Bay.

In late July 2005 the South China Morning Post said Apple wants to open 3 locations in Hong Kong ranging from 800 to 12,000 s.f.

City is a major tourist destination and the center of Asian business, which equates to lots of potential customers. Status: for sure, but no firm plans seen

Dollar, down

3.2

--

28.8

Canton Road in Kowloon

South Africa

Apple reportedly has less than a 2% of the desktop market in this country, far from the usual lines of supply, concentrated almost exclusively in the design and art markets.

Several Apple Centres cater to a robust Apple customer base, and new ones are being built (Victoria & Alfred Waterfront, Cape Town).

Status: possible

 

3.1

--

10.7

 

Denmark

 

Status: not likely

 

2.7

50

31.1

Kopenhagen

Singapore

The SARS outbreak hit retailing hard, and national Goods & Services Tax (GST) increased on Jan. 1, 2005 from 4% to 5%.

Retail space remains tight in prime shopping districts such as Orchard and Marina, but prime shopping center space has remained relatively stable. Status: possible

Dollar, up

2.3

--

23.7

 

Saudi Arabia

There are existing Apple resellers in the country, including recently upgraded Apple Centre. Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud owned a 5% share of Apple stock in 2001, but it's not clear if he's still a major stockholder.

Consumers are generally well-educated and have disposable income. Shopping centers are becoming popular, including like Kingdom Mall and Al-Faisalia Mall, and the future Gulf Shopping City. Several international retailers have opened new stores in the country. But cultural and government differences make doing business in the country difficult. Status: not likely

 

15.0

--

   

United Arab Emirates

 

Dubai has 35 shopping centers, including those inside hotels, and the Emirates Towers shopping boulevard. Country is #2 in consumer spending in the Arab region.

 

11.1

--

   

Kuwait

Apple Center opened Feb. 2005

Status: not likely

         

Mexico

The country is served by 10 authorized resellers--for the consumers that can afford Apple's products. The U.N. reports that 20% of the population is below the poverty level, and income inequality is high. But literacy and education attendance are high, and Internet and PC use is relative low (but higher than many Asian countries).

Status: seemingly confirmed in August, 2008 with unknown opening date.

 

 14.0

 11.2

 9.6

Mexico City at TorreMayor skyscraper retail area

Sources: Internet Index: 2004 CIA Fact Book; PC Index: 2003 United Nations; GDP: IMF, Retail info: Euromonitor International, World Taxpayers Assoc.

Also check the Global IT Report on networked readiness among the world's countries, and an analysis of emerging mass-market retail opportunities (pdf)

Currency trend - the cost of the foreign currency over the past year using U.S. dollars
Internet Index - relative number of Internet users in the country
PC Index - relative number of personal computers in the country
GDP index - per capita gross domestic product derived from purchasing power parity (PPP) calculations