Taking Back the Market

Apple Retail Visit Numbers Are Dropping

Tim Nash - 2009.01.13, updated

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In Phil Schiller's Macworld keynote, he stated that 3.4 million was the number of retail visitors per week. Assuming this was the average for the last quarter and not the best week, there were 44.2 million customer visits.

Update: In the conference call covering the December quarter, Apple CFO Peter Oppenheimer, said that the retail stores had 46.7 million visits. This averages at 3.6 million visits per week, not the 3.4 million given in the Phil Schiller keynote. With this new average, per store visits were nearly the same as the September quarter.

2008 quarterly results
Apple Financial Results (chart adapted from ifoAppleStore.com)

While this total is up slightly on the September quarter's record 42.7 million, the average number of stores open is also up 10%. This means the average store has had about 800 fewer visits per week in a quarter when visits in previous years have gone up - from 3% in 2005 to over 30% in 2007. However, visits are still up by over 1,000 per week from the December quarter in 2007 and up over 40% from 2006 and 2005.

Foot Traffic Down

Foot traffic is down everywhere, so many of these "lost visits" may be passersby who wanted to check email and compare online and retail prices. At the end of the quarter, I twice went to the Regent Street, London store. Both times I was able to get on a MacBook whenever I wanted. This has never happened before.

However, 6 to 8 staff were kept busy ringing up purchases, so short term sales may not be affected. Square, the Apple Premium Reseller in New Oxford Street, also had a queue of buyers.

In the longer term, the more people who use Macs regularly, the more people will buy them. Switchers buy 50% of Macs sold in Apple Retail, according to Peter Oppenheimer, Apple's CFO. At the average price, those sales generated $450 million last quarter out of total sales of $1.72 billion, so Apple needs to keep attracting them to keep retail highly profitable - as well as expand market share.

Microsoft's 'Apple Tax' chart
Microsoft's chart showing the "Apple tax".

It takes a long time to shift perceptions. "Macs are overpriced" is still burnt into many people's subconscious. This is one reason why Microsoft is trying to push the idea of an Apple tax.

Another is the difficulty in explaining why, according to NPD, when US consumers choose a $1,000+ laptop, two-thirds of them buy Apple. In other words, why similarly spec'd Windows laptops are worth less.

Switching Can Be a Slow Process

It often takes a long time to switch too. A friend who teaches at a German university came to stay. As she always has music projects on the side, Macs were a natural fit, but she had a PC. Her closest music collaborator is Mac based and had talked of the advantages for years. During previous visits, she had used one of our Macs, and after some help preferred OS X. But it was only when her 6-year-old PC was dying that she was really prepared to look at alternatives.

She then found that all her programs were available and happily switched, transferring files with the help of the university support desk. This combination of reluctance to change from what you have spent a lot of time learning and needing to make sure of what support is available, is common. This is why Apple Retail needs motivated staff to help possible switchers get used to OS X and to make them feel that Macs are worth paying a premium price for.

While cutting the hours of part timers at this time of year is standard for retail, there will be much more unease if what are seen as permanent positions are cut. If Apple can boost the foot traffic and keep the stores busy, it will be a lot easier for the staff to stay motivated even when there's less happening in the surrounding stores.

Appi Hour

So why not an "appi hour"? With the large number of iPhone developers, many stores will have a large enough group close-by to put on a regular hour, say giving each developer 20 minutes to show off its game or app. Developers complain on the lists about difficulties in getting enough exposure, so this would also be a "put up or shut up". Any gaps in the program could be filled by staff picks. When people buy an iPhone or iPod Touch let them know about it. Display the "appi hour" details at the Genius Bar, in the store, storefront, and on the website so people can see what is happening when.

Whenever bands are featured in a store, look to stream the performance to other stores and replay the performances wherever there are theatres. This would be a very effective way of starting and publicising tours and new records. Copies of the performance could also be made available through iTunes.

As well as adding to the visitor numbers, this would strengthen the ties between musicians and Apple.

The news from the retail sector has been mainly bad, and electronics resellers like Best Buy have suffered, but Apple has ways of expanding it's business not available to others.

We'll know much more about how well Apple Retail is weathering the depression after the conference call on Jan. 21. LEM

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Tim Nash is a Director of WattWenn which has a new approach to scheduling the production of TV and movies to make the most of budgets. The views in this article are his own and are prejudiced from spending more years working for computer companies than he cares to remember.

Tim lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the Macintosh IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

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