Think Different and Make Money
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Asymco has compiled some very interesting statistics about the retail industry in the US, and they show how much of an extraordinary success Apple (NASDAQ: AAPL) is having in that business. Apple is the company with the highest sales per square foot in the industry, with more than double the sales per square foot of the second performer, Tiffany (NYSE: TIF).
Tiffany has traditionally been thought to have a natural advantage when it comes to sales per square foot, because it sales small items with particularly high prices -- hence the relationship between sales value and physical space required is more convenient for Tiffany than for most other retailers. But Apple has shredded that theory: while Tiffany is above $3,000 per square foot and its closest competitors are below $2,000, Apple is showing an amazing record of more than $6,000 per square foot.
When compared to companies in similar industries, such as Best Buy (NYSE: BBY) and GameStop (NYSE: GME) the difference is even more notorious. None of these companies passes the $1,000 per square foot mark, and the difference in growth rates is outstanding. Considering Apple's size, being the most efficient retailer and having the highest growth rate at the same time certainly makes a fantastic accomplishment.
There are different possible explanations for this phenomenon: Apple products have been enormously popular, and that obviously helps at explaining the success of the company's retail stores. But Apple still sells its products through different channels, so customers could choose other alternatives if they liked the products and not the stores. This, however, is clearly not the case as the numbers so compellingly show.
There are many aspects that make Apple stores unique: their design, internal distribution and overall aesthetics were obsessions for Steve Jobs, and customer service and product availability are also excellent. But Apple stores are not just about buying a product -- they provide an integral experience for clients, and the human touch is a key part of that experience.
Frontline employees play a critical role at helping customers in a very dynamic and personal way; they may show you a Disney movie on an iPad if you are in the store with your kid, and recommend some cool headphones if you are wearing a rock band T-shirt. They are ethnically diverse and modern, in a good representation of the brand's culture.
In fact, while other retailers have chosen to lower headcount and reduce interaction among customers and employees as much as possible, Apple has gone the opposite way and increased its employment numbers per store substantially. Increasing employee time per visitor has also increased revenues and profits per visitor, so the additional expenses have been more than compensated.
Store employees play a critical role for Apple. They are the best kind of advertising the company can have, dealing face to face with clients, answering questions, making suggestions or even allowing clients the possibility to use and feel the different products from the company. Think different is not only a slogan at Apple, it’s a way to do business, even when it comes to traditional industries like retail.
acardenal owns sghares of Apple. The Motley Fool owns shares of Apple, Best Buy, GameStop, and Tiffany & Co. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
