Are Apple’s Stores Overly Ripe for Expansion?
Is there such a thing as too much of a good thing for Apple? A study by Asymco details some impressive performance metrics for Apple Stores but also indicates it is struggling to fully capitalize on its traffic flow.
Asymco founder Horace Dediu said he based his findings on the data Apple publishes on its “retail segment,” which ifoAppleStore.com catalogs. Among the findings:
- The stores generate over $100,000 per employee per quarter.
- Each visitor spends an average of $45. At that rate, an Apple store employee creates sales at the rate of about $278 per hour.
- Assuming an employee works for 360 hours per quarter, the average employee sees six visitors per hour or one every 10 minutes.
Speaking to The Register, Mr. Dediu said these figures reflect the high value of Apple’s product line. Another plus for the business model is that the popularity of its products helps employees work at a higher level and at a decent wage while not requiring commissions that often lead to hard-sell tactics.
“Apple’s approach makes sure the customer is treated in friendly manner; it’s a very detailed protocol,” Mr. Dediu.
Still, he said that while Apple has some of the most valuable retail real estate in the world and continues to support its burgeoning traffic with ever-higher staffing, the hires are unable to catch up with the crowds.
“Apple is adding employees at a very rapid rate, and now averages over 100 employees per store, which is rising to meet traffic,” Mr. Dediu said. “Apple is throwing bodies at the problems, adding more people to handle the rush, but it’s getting too crowded and it can’t keep this up forever.”
Given the productivity across its stores, expansion would seem like the most obvious solution to solve any employee-to-customer efficiency issues, Mr. Dediu said.
Still, Apple seems to continually face saturation questions with each palatial store it opens.
The Asymco study came out last week as Apple opened its largest-store ever in Grand Central Terminal in Manhattan, its fifth store in the borough. Stretching across more than 23,000 square feet of space between two balconies and staffing more than 315 employees, the Grand Central store includes two Genius Bars, 15-minute Express Workshops and a product pickup area.
Apple officials said 2,500 people were waiting in line before the opening, and the store had nearly 4,000 visitors before noon.
Overall, Apple has 361 locations worldwide. Management still hasn’t named a new head of retail following the departure of former head, Ron Johnson, who officially took over J.C. Penney on Nov. 1.
- Apple stores getting close to overload – The Register
- How productive is an Apple store employee? – Asymco
- Apple Store workers bring in $278 per hour apiece – Cnet
- Apple Opens New York Grand Central Store – The Wall Street Journal
- Commuter-Friendly Apple Store Opens in Grand Central Terminal – Wired
- No retail head? No problem for Apple – Reuters
Discussion Questions: Should Apple Stores be concerned at all about saturation issues? In general, how do retailers measure the potential for expansion versus cannibalization? Are there ways Apple can more effectively utilize its staff at its packed stores?