How the Apple Stores make money

This week's blog entry comes to you from a rather unusual location, a fair ways from my usual haunts. Specifically, I'm in London (ethical disclaimer: I travelled to London as a guest of HTC for the launch of the Desire HD and Desire Z phones) and specifically in Leytonstone E11. I previously lived here back in the late 1980s, but it's been quite a while since I was here.

Now, just up the road is something that's not that unusual. A McDonald's. Genuinely not that unusual, but when I lived here more than twenty years ago and the place opened, it did have something unusual about it. Specifically (as I was told at the time; I've never properly checked) it was the first McDonald's in the UK to have a drive-through. Not that spectacular in an Australian context, but newsworthy here, at least at a local level at the time.

Head into that McDonald's, though, and it was (and probably still is) depressingly familiar. Plastic tables, plastic food. There's no real variety in McDonald's, and that's what sells. You can head into any McDonalds anywhere on the planet and it never appreciably differs, but it's also not what I'd say anyone could describe as a "nice" retail environment, merely a depressingly functional one.

Before you wonder if you're at the wrong MacTheMag, I'm setting a scene here. Because wandering past that McDonald's this morning got me thinking about Apple's stores. Apple and McDonald's have a few things in common aside from their country of origin. Both companies don't vary the items sold in stores to any great extent; they're the same wherever you go. In Apple's case that's arguably a more striking problem, as its offerings are also sold elsewhere. Apple's computers, phones and music devices are very widely available. You most certainly don't have to go to an Apple store to buy Apple products.

And yet Apple stores bring in the masses in extraordinary numbers and generate an awful lot of cash along the way. I think I've worked out why, and my comment about McDonald's above is the key to it. It's about having something unique to most of the "big" stores, and transferring that feeling to the smaller ones.

While I'd never planned to, I've now been to all of Apple's stores in Sydney. Chatswood is tiny, Castle Hill isn't, and Bondi has trees. Still, the undisputed "showcase" store remains the truly massive George Street Sydney store, which stands out from a distance and sells the brand and the Apple experience very well. There was a time when the Sydney store was the talk of the Apple world, but that time has passed. The recent opening of Apple's 300th store in Covent Garden London has generated a lot of buzz, and while I've been here, I took the chance to go and have a stickybeak.

Unlike the Sydney store, the branding is pretty subtle. You could pretty easily miss it from this side.

The store itself, once you're inside, is simply stunning. I'm not being paid to say that, but it's a great mix of design ideas that gives a feeling space no matter where you are.

There's even a choice of the trademark glass staircases, including an impressive spiral staircase.

Ultimately, while it's an impressive design, it's also a very comfortable and relaxing one. It's a nice environment to browse Apple's products in, and undoubtedly Apple is hoping folks will open up their wallet while they do. Based on the claims that Apple's amongst the top tier for making money from each and every square metre of their stores, it's clearly working.

Getting back to my original analogy: twenty years ago, the McDonald's just up the road from me generated some interest and sales by having something special and new. It's neither special nor new any more at all. It's just another plastic franchise restaurant serving food of debatable nutritional value. Its "new" thing was just another sales strategy that didn't make any appreciable difference to the enjoyment of the sales experience.

Presuming Apple keeps it neat and tidy, there's nothing that's going to make flagship stores such as the Covent Garden one look and feel any less impressive in twenty years' time. I think that's largely the secret of Apple's retail success. It's not as true of the smaller stores, which tend to more of a mall feeling, but again the existence of the bigger flagships does allow the smaller stores to pick up some of the rub and easygoing feeling.

Discuss it with me at MacTheForum!