Apple 2.0

Covering the business that Steve Jobs built

Apple Stores top Tiffany's in sales per square foot, again

November 13, 2012: 7:12 AM ET

But the $45 dollars the average Apple Store customer spends each visit is the least of it

Source: Retail Sails

FORTUNE -- It is likely that there is no retail outlet in the world that generates as much cash per square foot than an Apple Store.

That's certainly true of the U.S., according to the latest top 10 list from Retail Sails, which ranks U.S. chain stores by their productivity (see chart at right).

Apple (AAPL) was No. 1 last year, generating sales twice as efficiently as Tiffany's at No. 2, and it is No. 1 again this year -- despite the unhappy reign of Dixon's John Browett and a recent slowdown in same-store sales.

But as Needham's Charlie Wolf keeps reminding us, the purpose of the stores is less to move product than it is to market the company -- to be the face of Apple. Even before customers began queuing up to buy the latest iPhone or iPad, Apple's brick and mortar outlets were the key to getting Windows users to switch to the Mac.

"Apple's 2000 decision to open Apple-owned retail stores was motivated by the Macintosh's largely invisible presence in the U.S. retail channel," Wolf wrote in 2010. "The Mac's nominal market share did not warrant the allocation of significant sales resources on the part of resellers. And in a PC-centric world, the Mac was shortchanged even where it was sold. Apple's only recourse was to open company-owned stores, where the Mac held center stage...

"What Windows visitors quickly realized is that Mac owners received professional post- sale support thrown in for free—a virtually non-existent resource in the Windows world. Chris Anderson in his book, Free, highlighted the Genius Bar as an example of Apple' strategy of integrating a free service into the price of Macs. In the Apple Stores, Apple is building its image as the most service-oriented company in the computer and consumer electronics industries."

For a detailed, up-to-date analysis of the Apple's retail operations, see Horace Dediu's Minding the Store at Asymco.com.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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