Nov. 13, 2009 -- Shoppers walking midtown Manhattan's Miracle Mile could be excused for gawking more at Tiffany's multi-carat diamonds or Harry Winston's $100K necklaces than the $59 iPod shuffles a few steps away. But those who do are skipping the biggest money maker in one of the world's most exclusive shopping districts.
And now there's a new member of the club.
As with many of the company's retail outlets, the store's sleek design embodies the California-based computermaker's reputation for state of the art technology. And in New York at least the stores have also become commercial juggernauts.
The first New York City store replaced a post office in the popular SoHo shopping district, and last year a three-level all-glass store opened in the trendy meat-packing district.
But no store has been more visited than the 24-hour centerpiece of Apple's retail strategy, the glass-cubed structure in midtown, believed to be the highest-grossing retail outlet on Fifth Avenue. The store brings in an estimated $35,000 per square foot, nearly double that of neighboring Tiffany & Co. and triple that of Harry Winston, according to Jeffrey Roseman, executive vice president of real estate broker Newmark Knight Frank Retail in New York.
"We opened our first store in Manhattan seven years ago, and the response has been incredible," said Apple Senior VP of Retail Strategy Ron Johnson.
Retail Is Ringing Up Profits
What started as an experiment in 2001 is now celebrated as one of the most successful retail store chains in the world. With an average store measuring 6,000 square feet, Apple stores have improved revenues from $10 million per store in 2001 to $26 million per store in 2009 while expanding into its 10th country.
Other electronics makers have not had the same success in the retail space. Microsoft, for example, is just starting to develop its own branded store.
"We have a 10-year head start," Johnson said.
Many scoffed at Apple when the company began building stores -- questioning the wisdom of buying expensive real estate when a customer might replace an aging computer at most every three years and could find cheaper prices online.
"Our plan was to find great locations. Bring the stores to where people shop," Johnson said. "And we wanted to ambush the Windows users."
In the past year Apple stores have hosted 170 million visitors, bringing in $1.4 billion in profit and changing over 1 million people from Windows to Macs in their retail stores, according to Johnson.
The company plans to open 40 to 50 more stores in "great locations, with great design and with great people" in 2010, including new "significant" stores in London, Paris and two in Shanghai, China.
The Big Apple Is Good for Apple Inc.
In one of the newest of Apple's "significant" stores, the Upper West Side architecture is reminiscent of a modern museum. "Significant" is a distinction bestowed upon Apple's grander buildings located in large cities, which use more precious materials and try to make a statement on the local skyline. It is one of the few stand-alone stores in an area saturated with skyscrapers, and at night the bright lights coming from inside light up the entire block.
The space formerly occupied by a Victoria's Secret store was completely gutted and demolished, and the current two-story, glass-framed structure was built from scratch.
Cash registers are absent. Instead, each employee will accommodate transactions with custom-made software that runs on an iPod Touch. They'll still accept cash with the drawers hidden in the wooden display tables.
The glass-and-steel roof is curved upward and sits atop 45-foot-tall marble walls, giving the space a cavernous feel, particularly when compared with typical New York retail. Eleven of the iconic 32-foot glass cubed structures from the Fifth Avenue store could fit inside this new one.
The bright street-level floor is reserved for hands on experiences with more Macs, iPods and iPhones than any other store in the world. A quick walk down the trademark spiral staircase brings visitors to the lower level and the largest area of any Apple store created for personal training and tech support.
There are no windows below ground, but the staircase allows some light to shine and gives iPhone users five full bars of AT&T 3G coverage.
Johnson pointed to lessons learned from previous stores.
"We realize we need larger stores, and we can't make enough room for the Genius Bar," he said. The Genius Bar is Apple's genius idea of offering lifetime free technical support at each of their stores. The newest Genius Bar offers 45 feet of technical support.
The ground level is dedicated to selling accessories, a kids' section and an area designed to accommodate 100 people receiving technical support or one-on-one training.
Apple, known for its quirky but knowledgeable staff, said 10,000 people applied for jobs at the store, 2,500 interviewed and 220 were eventually hired. Besides offering sales advice and technical support, staff will host free events with the focus on arts and children aimed at those under 25.
The newest Apple Store opens this Saturday at 10 a.m.
Traditionally, Apple fans line up before the doors open, and cheering employees welcome them; the first couple thousand typically receive souvenir T-shirts. With a nod toward the family-saturated Upper West Side, Apple will hand out 500 children-size shirts for the first time.