26 June 2012

Apple Stores

asymco | Horace Dediu | The face and the brand

The corollary to this would be that the job of the [Apple] store is not primarily to sell things. This is confirmed by the fact that store employees are not on commission and there is no sales pressure on visitors. Indeed, the sheer number of employees in a store of modest size (117 employees on an average of about 8k sq. ft.) implies a brazen disregard for the economic orthodoxy of retail efficiency and incentives to sell.
The last three times I was in an Apple store I literally could not get an employee to take my money. Each time I have been left standing in the middle of the floor with a product in one hand and my wallet in the other asking every uniformed employee I could get my hands on if they would please sell me this thing. Each time it took me ~90 seconds to find the product I needed on the shelf, but 10-15 minutes to track down someone who was authorized to let me exchange that product for money.

I don't want to second guess their strategy. It's obviously working for them. But come on. I'm doing all the work for them: just let me give you some money.

If we take a visitor-centric point of view, the analysis of the retail business simplifies considerably. We can even derive an “income statement per visitor”. Revenues are measured per visitor (currently about $52/visit). Costs are measured in terms of employee time. A $15/hr average wage and 15 min interaction time per visit puts the service cost at $3.75/visit. Profit per visit is also measurable and it’s currently at $13/visit. Therefore the employee “FaceTime” costs 7% of sales, while other costs, including the cost of goods sold, add up to 66% of sales.
$52/visit is a good mean, but I want to see the distribution of sales per visit. I bet the variance on that is huge.

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