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Ramping Up Retail in the Run-Up to Release Season

By Erika Morphy MacNewsWorld ECT News Network
Aug 28, 2013 5:00 AM PT

Apple's retail operations can be counted among Steve Jobs' "babies"; the stores' slick design and sales techniques are legendary in the industry for their per-square-footage sales. In 2012, according to industry statistics, Apple retail store sales outpaced Tiffany's by 40 percent on a per-square-foot basis.

Ramping Up Retail in the Run-Up to Release Season

Apple is in no danger of following in the footsteps of, say, J.C. Penney or Sears, but its retail operations have shown some worrisome signs of decay. In the past quarter, its visitor count declined slightly to 16,000 visitors per store per week from 17,000 in the same period last year. Also, per-store revenues posted a disconcerting 9 percent year-over-year decline.

A New Face (Finally) in Apple Retail

That is why news that Apple is finally filling in its somewhat empty managerial bench has been welcomed by company devotees and shareholders.

Last week it came to light that Enrique Atienza is joining Apple's retail team. Atienza was senior vice president for Retail Americas and Global Store Operations at Levi's, according to news accounts.

We are sure Atienza will be an attribute to the Apple retail team; we are equally sure that this often underrated and overperforming portion of Apple's operations is ready for some executive guidance. Last October Apple shook up management a bit; among those to depart was retail chief John Browett.

The aforementioned decline in Apple retail sales is probably not due to a lack of direction from management; indeed it would take far more for Apple retail to climb down from its current top perch.

Rather, the diminished traffic is surely due to the fact that Apple has not released a new product in years. Once it does, this fall, its numbers are bound to start moving north again -- with Atienza presumably riding herd.

Apple Retail Goes to Brazil

Speaking of retail, Apple is reportedly planning to open its first Brazilian retail store in Rio de Janeiro in early December, according to a report from Brazilian technology magazine Info Exame, which Mac Rumors spotted.

The news is not surprising -- indeed, we had assumed that Apple's retail empire was already well-entrenched in Brazil, given Brazilians' love for U.S. products. So why Brazil, why now? Here is one theory: The country is becoming more strategically important to Apple on many levels.

Namely, the company has been working with Foxconn to open a number of factories in Brazil this year. Not that Apple will dedicate all of the production from these factories to its Brazil store(s) -- in fact, the drivers assumed to be behind Apple's decision to tinker with its manufacturing and supply chain still stand: Global companies need to be geographically diverse, especially when so much of the world is prone to natural disasters. Also, Apple's "made in China" image has been taking a beating over reports of worker mistreatment.

Foxconn, of course, runs the factories in which these incidents are said to have occurred. Whether reports surface from the Brazil factories will be telling. Then again, Apple seems to be prone to such accusations, perhaps because of what it is.

Last month Apple retail workers filed a class-action lawsuit alleging the tech giant owed them unpaid wages. Namely, two workers have claimed that they typically have to wait 5 or 10 minutes each day after they clock out for the manager to check their bags for stolen items.

Coming This Fall

All of the above leads to one natural conclusion. Namely, Apple had better clean up some of the accumulating clutter in its retail house before the stampede expected this fall. Not only is Apple releasing -- finally -- a new iPhone, but the Mac Pro will also be available.

What a computing device it will be, if the newly released ads are any indication. Apple has already launched a campaign in movie theaters showing off the space-age-looking device. It just added a clip to its YouTube channel for everyone else. As per usual, the ad is amazing, designed to engender feelings in viewers -- and succeeding, we might add -- that they will simply die if they don't own one of these machines.

Foot traffic will also be on the rise when Apple's widely expected in-store iPhone trade-in policy goes into effect. Assuming the rumors about it are true, the policy is designed to get consumers to buy its forthcoming device. While a trade-in conceivably could be done by mail, more than likely people will schlep to the store to exchange their old smartphones for the new one. When they do, they are not going to want to be serviced by employees feeling sour over their unpaid wages.

Erika Morphy has been writing about technology, finance and business issues for more than 20 years. She lives in Silver Spring, Md.

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