The Indestructible Apple Store?

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Apple opened up five new brick-and-mortar stores this past weekend, bringing it ever closer to its goal of having 242 stores operating by the end of this month. But in the comment thread for our news brief on the latest round of Apple Store openings, one of our forum members asked an intriguing question about the company's retail efforts.

Has an Apple Store ever closed? Not just relocated to a better spot in the mall, I mean really closed down for lack of sales.

It's an intriguing question--for me, at any rate--because I don't know the answer off the top of my head. I put in a call to Apple's PR department, and once I get an answer, I can post it here.

But while I'm waiting for that phone call to be returned, I can do a little detective work of my own. A series of Google searches using variations of terms like "Apple Store" and "closes" or "shuttered" proved fruitless--I came across an article or two about stores closing early in advance of product launches and a couple notices about the Fifth Avenue Apple Store in New York temporarily closing its doors to film a TV commercial but nothing along the "We're closing our doors forever! All merchandise must go!" scale.

So I moved on to a more intensive search. The September 2003 issue of Macworld has a graphic listing the first 63 Apple Stores to open. I then surfed over to Apple's retail page and used the store locator to see if those 63 stores were still open for business. I'll cut right to the chase--all 63 of those stores appear to still be operating. That still leaves us with 150 or so other stores to check on, but I would be surprised if there were any closures in the bunch.

To answer the reader-posed question above, then, we're still waiting on the official word as to whether any Apple Store has ever been shuttered. (This timeline mentions a number of temporary closures, but those were part of Apple's plans to renovate and reconfigure older stores.) But if one has, it certainly seems to have escaped anyone's attention.

Which brings us to our next question: Why are Apple Stores able to remain open for business in the often topsy-turvy world of retail? I think there are several factors at play here.

-- Apple knows how to pick its spots: As with most of its operations, Apple isn't terribly forthcoming about what criteria go into picking where its stores pop up. But a look at any map of Apple Store locations in the U.S. gives us a broad idea of what the company's aiming for: Apple opens stores where the people are.

This five-year-old press release marking the second anniversary of Apple's retail efforts said that 90 million people in the U.S. lived within 15 miles of an Apple Store. It's likely that figure has grown as the number of Apple Stores have increased.

And these are not out-of-the-way locations, either. This New York Times profile notes that Apple puts its stores where shoppers already are--shopping districts, malls, promenades, and so forth. It's costlier in terms of rent, but it gets the Apple brand out in front of would-be customers instead of forcing them to come find Apple--and that seems to be the point of the company's retail effort.

-- Apple's got some big brains leading its retail efforts: The New York Times article linked above also takes a look at the role Ron Johnson, Apple's senior vice president of retail, has played in shaping the company's strategy for its stores. We've already touched on Johnson's critical role at Apple--suffice it to say, the retail operations appear to be in good hands.

-- Apple takes the long view: The Apple Stores turn a nice profit for the company now--US$297 million for Apple's retail segment during the last quarter, up 61 percent from the year-ago period--but that wasn't always the case. The retail segment lost money through most of 2003, and profits were fairly modest in 2004. A lot of companies might have blinked and pulled the plug, but it seems like Apple's retail efforts have never been judged entirely on how big a profit the stores can generate. Rather, the stores seemed geared toward attracting visitors and selling Macs, and on both fronts, they tend to do pretty well. The company sold 476,000 Macs through Apple Stores last quarter, half of which were sold to new Mac customers; the company also reported a record number of training session attendees at its stores during the quarter. (These charts at IFO Apple Store show how profits, sales, and visitors have increased over the years.)

This is not to suggest that Apple will never have to close a store--the world of retail is far too tumultuous to ever make that broad a claim. But I would argue that the people who predicted a disaster of Gateway proportions seriously underestimated how well Apple thought out its retail plans. And that kind of planning and vision suggests a company that will be able to coolly respond to whatever conditions the retail market happens to throw at it.

This story, "The Indestructible Apple Store?" was originally published by Macworld.

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