Apple could tweak its retail stores to turn them into “gold mines,” Charles Haddad opines in his latest
Byte of the Apple
Business Week Online
The columnist writes that the stores are doing a great job of drawing all kinds of visitors — Mac lovers, PC uses, folks who’ve never owned a computer — but the sales aren’t strong. Haddad notes that Needham analyst Charles R. Wolf says that that Apple’s outlets are persuading about only 1 percent of all store visitors to buy Macs — and most of those buyers are already Mac enthusiasts.
“That’s pathetic, considering Apple reported more than 800,000 people passed through its stores in December alone,” Haddad says. “In private, Apple acknowledges its clerks are doing a poor job of selling Macs. The company even admits the clerks aren’t to blame. Apple stressed Mac expertise — not salesmanship — when it trained them. That’s what has made the stores a dream come true for us Mac enthusiasts. But now Apple plans to beef up its instruction to teach clerks how to close the deal.”
So the picture’s not too bleak. Wolf fed Apple’s retail numbers through his various financial-modeling spreadsheets and found that the company need persuade only one more percentage point of visitors to buy Macs for its stores to become a “smashing success.” This means that in a chain of 100 stores, 2 percent of store visitors buying a Mac would translate into 73 weekly sales per store, or about 377,000 total annually. That would boost Apple’s U.S. market share in computers to 6.5 percent, from 4 percent. And Apple expects to have 124 stores by the end of 2003.
But Haddad says there’s even better news: the average transaction price in an Apple outlet is a lot higher than on the company’s Web site or at big retailers such as CompUSA. Wolf calculates that customers spend an average of US$2,050 when shopping at an Apple retail store. That’s approximately $400 more than the companywide figure.
Of course, it will take time to pull this together. Stores are still being built. Employees will have to be trained — or re-trained. Meanwhile, the stores aren’t doing that poorly.
He thinks that the pieces are falling into place for the retail stores to really take off. Overall computer sales are slowly rebounding. And the new iMac should help pump up sales and interest, Haddad says.