Can tony Apple stores survive a down economy?

Are Apple stores elitist? You bet--and that's not a bad thing. Unless the U.S. economy keeps going south.

How do I know Apple stores are high rent? I live in Southern California, and every Apple store within 50 miles of me is in a tony, upscale neighborhood. A new store, for instance, opened in September near my home in the swankiest shopping center in the area--bar none. No Best Buy, Radio Shack, or Circuit City could touch this real estate.

Ditto for the East Coast. The Apple store nearest the town where I grew up is in one of the snazziest shopping spots in suburban Philadelphia. (The clusters of $40K-$50K cars is a giveaway.)

So, the coolest, hippest, greenest (though the latter is debatable) computer company is arguably the most elitist.

Here's the challenge: As consumers think hard (or not at all) about computer purchases, Apple is going to be more pressed than ever to deliver inspired, compelling designs to keep people flocking to its stores (and flock they still do).

A lot has changed, obviously, in the last six months. Many strips malls are languishing as more and more store fronts go vacant.

Mark my words, the first sign that the Apple strategy is faltering will be the shuttering of shops. It only takes a few closings to get the wrecking ball rolling to other stores.

Remember all those Gateway Computer stores? It started with a few here and there and then everything went all at once. The same thing happened to CompUSA and Circuit City. So, for Apple, the canary in the coal mine are its stores.

Maybe they'll thrive despite the economy. Maybe Apple really is different. Maybe.

[desertragweed]

I was in one of our three Apple stores on Friday, and they were busy as usual for a weekday. The salesman told me that on the weekends it is as mobbed as it usually is (why I go on a weekday). So, while it may have slowed down for Apple, it sure is not real evident to the casual observer.

[atomD21]

Foot traffic doesn't necessarily equal sales. Everyone in a small town could go to the Apple store, but if only a few people buy anything, that's not good.

[Seaspray0]

apple has had an issue with teanagers using the demo computers to log onto facebook. Was anyone buying anything at the counter?

[bgnm]

Elitist? You can't be serious. On every visit I've made, I've seen the obviously affluent but also plenty of very ordinary people. That you get what you pay for is a not fact known only to the well-to-do.

[JumpinJappold]

RightOn - Well said.

[gigo1000]

It might have something to do with the fact that you get real customer service in those stores - whether you are affluent or not.

[unknown unknown]

No it's elitist, in the smug, some times snobbish, superiority many Mac fans have.

[wolivere]

But, after reading on CNet how Sony looking at the mid to high end crowd for its game Console is such a huge mistake.

Every store can have a spin put on it one way or another.

[Rod Roddy]

What's Crothers talkin' about? Here in San Francisco the Apple store(which is one of the few Jobs has actually visited) is within walking distance of one of the S#1+@est neighborhoods in town. Elitist?...no.

[DrtyDogg]

His post had nothing to do with the people in the store, he was looking at the high cost of rent for the area they are in.

[tismeinaz]

They seem to be weathering the economic store pretty well. Even though they are in elite malls they cater to anyone willing to look at and buy their product. I was there a couple weeks ago and Shaq was there along with every day middle class folks like me. Two things that they have over the the others is the genius bar and classes. Their 'we support you after you bought it' attitude helps them immensely. Also, people will blow a few bucks on software or peripherals as it is cheaper to stay home and work on projects rather than go out or away.

[JumpinJappold]

Right ON! How overrated this 'travel stuff' can be sometimes; just get some decent software and have at it! You can do so much from your home (or a park for that matter)- just get the right tool for the job! And yes, that's FREE technician appointments and FREE and DIRT CHEAP training from qualified, certified individuals.

[willychu]

"Mark my words, the first sign that the Apple strategy is faltering will be the shuttering of shops. It only takes a few closings to get the wrecking ball rolling to other stores."

Not a chance. With $28,000,000,000 in cash, Apple can easily outlast this recession and be poised for continued growth afterward.

"Remember all those Gateway Computer stores?"

Comparing Apple to Gateway shows a fundamental misunderstanding of what differentiates Apple and its products from its competitors.

[wolivere]

Actually its not much off, Gateway in the 90's was a good builder. They made an excellent product, excellent support, for a good price. They were not the cheap white box. But they garnered a very good following for how good of a company there where. They came out with a lot of decent products.

But as the success came so did new management, that began to promote subpar equipment, at the higher price, with poor customer service.

It was not long after this phase that the gateway stores started to pop up every where, and things just spiraled down.

This in some ways you can thing back to the days of Jobs not at the helm of apple, when they pumped out expensive, paper weights that where crap.

It took near bankruptcy, the MS Anti Trust investigation, a quick influx of cash from MS and a new (Old) leader to pull them out of vanishing.

Its for reasons like this that people worry about the future apple, they have come back they have taken back some there old market. But the fear is if Jobs is gone from the lead, how long till the bean counters drive the company back into the ground again.

[rattyuk]

@Wolivere.

"Actually its not much off, Gateway in the 90's was a good builder. They made an excellent product, excellent support, for a good price. They were not the cheap white box. But they garnered a very good following for how good of a company there where."

NOPE. Apple is NOT Gateway. If this were true then the Apple stores would have failed when everyone first said "Apple Stores will fail - look at Gateway!"

[bravian]

@wolivere

Ignoring the product - Gateway stores were frequently opened in low income areas staffed by your typical PC lackey. It wasn't a good customer experience. This is the fundamental difference between Apple and other stores (such as Sony's) - Apple is about the experience which is excellent. Look in a Sony store and then look in an Apple store. The Apple store is full and the Sony store is empty.

[andrew-lo]

Are you sure that Apple has $28,000,000,000???

[wolivere]

I think you are confusing things, the original Gateway Stores where pretty darn nice, and yes in the mid 90's where staffed by knowledgeable nerds. This was the early 90's remember. There where not many typical PC lackeys back then, the net was coming up, CompuServe and AOL still ruled.

Gateway was still Gateway 2000. They where 2 different companies in my opinion. I worked for a very large Fortune 500 during those days as part of Network support (Novell) and I would say the company had 5-6k Gateway Desktops and Laptops during the time. The support was excellent, with the quick parts turn around, depot services.

Once they changed though it was like a meteoric decline. The last thing I purchased from them was two horrible laptops in the 2003. And yes I remember walking into a Gateway store in 2003 and wondering what had happened.

I remember Gateways huge Ad's they use to take out in PC Mag. They had been a good company. But then again, how many would remember that Olivetti was the number 2 (EU) 3 (NA) PC Maker of the 80's

[regulator1956]

Cash in the bank means nothing. The shareholders - the owners of the company - are concerned about revenue, profits and growth.

Lots of companies with lots of cash in the bank are laying off employees and closing operations.

I'm sure Apple will do an excellent job of getting through these hard times. Whether or not they close stores will be a financial decision that will have little or nothing to do with their cash position.

You, my friend, need a economics class.

[CDubber]

Wow, the Apple doomsayers are back! As willychu said, Apple has plenty of cash to prevent the "shuttering of shops." I do agree that Apple needs to keep releasing innovative new designs (new iMac and Mac Mini, where are you???) to keep its business fresh, but I think Apple is in a far better position to weather the downturn than any other computer maker or consumer electronics manufacturer.

Like desertragweed, my local Apple store is still crowded, even on weekdays. And to echo willychu, comparisons to the Gateway Store are laughable at best.

[Seaspray0]

Doom! Doom, I tell ya! It's much better than castle wolfenstein.

[philrgessler]

Less apple stores? They should be making more! I have to travel over an hour to get to one, and if they made more, they could convince more people to get macs, and increase their market share. Not too many people go into an apple store and don't leave impressed

[SeizeCTRL]

Or they could allow OS X to run on any X86 hardware. If I had the choice to to install Windows, OS X or Linux on a PC I built, there would be a high chance that one of my custom boxes would be running OS X. You give people the choice of where they can install the OS and get used to it, then it will be more likely they will end up buying the overpriced shiny metal box with a big Apple logo on it.

[JumpinJappold]

Love the spirit: In times of slow, SPEED UP

HAHAHAHAHAHAHA

[wolivere]

Nat that's is what they need, it seams at least here the Apple stores that are in the "Big Electronic stores" have progressively shrunk, and slowly moved from the front of the computer sections to the back.

When I asked about that, a salesman explained, the price/performance drives people away. When they have a Mac Laptop sitting a few feet away from an Acer/HP/Toshiba people come in look at the Mac try it walk over to the others which are selling for 1/3 the price play with it for a while, then walk out with the non MAC.

[tismeinaz]

by SeizeCTRL March 1, 2009 9:29 AM PST
Or they could allow OS X to run on any X86 hardware. If I had the choice to to install Windows, OS X or Linux on a PC I built, there would be a high chance that one of my custom boxes would be running OS X. You give people the choice of where they can install the OS and get used to it, then it will be more likely they will end up buying the overpriced shiny metal box with a big Apple logo on it.

Then a mac would be no different than a pc and you would be thrown into the vicious circle of 'it's the hardware' from the software folks and 'it's the software' from the hardware folks. My apple machines have been better than the pc's from hell that I have owned and one of the reasons I love Apple is that they take care of it all.

[pithenumber]

@seizectrl
uhhh. you can run OS X on most x86 hardware, its called Hackintosh

[buckie55]

Another speculative article by a professional news writer with nothing to say. Another example that doom and gloom always gets printed or posted.

[JumpinJappold]

Right on again. Well said.

[arj8138]

Yes Apple stores vs. Gateway Stores vs. Dell Kisoks are very different

The reason the Apple Stores work / are still working is that they offer something more than just computer and accessory sales. Why did I want to go into the Gateway Store that was in some strip mall when I knew that I didnt wanna buy a computer? But I do want to go to an Apple Store to get my stuff fixed, try out products, look at accessories, ask questions.

[Seaspray0]

but the store won't make a profit from you trying out products, looking at accessories, asking questions... they make a profit from sales. Maybe you should buy a computer every time you go there.

[c4s2k3]

So . . . I take it Mr. Crothers would feel more optimistic about Apple's retail chances, and would not classify the stores as "elitist" if they were in low-rent districts? Give me a break! Besides, Apple's merchandise has never been what you might refer to as "bargain basement." Perhaps Mr. Crothers can come up with a valid business reason and plan to operate a retail store for such merchandise in a dumpy, low-rent part of town. Bottom line is, the economy stinks and it will hurt almost everyone in business today. If Apple should indeed feel enough of a pinch to close some stores, that does not mean there is significant fault with its retail strategy. Closing stores when the economy was not in such dire straits (like Gateway) is a different story.

[gkent1]

No statistics, no financial statements , just idle speculation by another doofus. Yes Apple's profits will be down, just like everyone else in this recession, but unlike everyone else they will still be making profits. The author trolled, I bit, and now feel foolish.

Headline: CNET may fold in the recession if readers abandon this website due to its lack of substance and advertisers follow. The first sign would be the axing of some of its poorly performing writers.

[sparrowhyperion]

Elitist... LOL I love the terms we use for people with more money than brains... If you have to go out and spend 3 times what you normally would for something you don't really NEED to begin with, just to have a little Apple logo on it, then I am glad I'm not "Elite". Seriously, I get all the music and video functionality I need from my little Sony Walkman MP3/Video player. The Ipods are so overrated. As for their PCs. Most of their customer base doesn't seem to realize that they are pretty much just overpriced PC clones now,; just in an overpriced artsy craftsy case which is mostly plastic. One good drop off a desk and thats it. And as for their OSX, I'd prefer Windows any day. I like having total control over my PC. I do not want some dumbed down Linux/Unix type OS with a fancy desktop. A lot of rich folk say they like their Apples because they are so simple. What they should be saying is that they think they are too rich to actually go out and (Gasp) learn something about PCs. Elite my Derrier....Apples greatest asset is not it's technological superiority (Laughing my head off), it's it's Advertising Department. They could sell mice for $3000 and they could find some moron to buy it.

[liven2]

Hmmmm, I am a long time Windows user but a realist to. Your comment is so over the top and absurd that I can barely take you seriously. ARE you kidding?... Have you ever used a current Mac for a few weeks months or even days to back up your claims? After being in IS / IT realm for my 30 plus years I think that your comment is total bashing to bash and is completely off-base. If they were really this bad I seriously doubt we would of seen there success in the last 5 years nor would we of seen their Store growth and continued increases if what you say is true.
Sorry but form what you wrote it comes from the realm of complete ignorance and immaturity. If what you say is true would like some fact to back it up and real life long term use by you.

[BlitzBoy1120]

Idiot. I agree with liven2. Back your facts up.

[tismeinaz]

Obviously someone who has never touched a mac let alone used one. Not to mention you must never have been on the receiving end of HP's Extended NO Service Contract. I learned about and used PC's before Windows was a gleam in Bill Gate's eye and learned about Mac's on an SE when Mac's were running a windows environment while PC's were in a DOS environment. Up until the BTO HP from Hell, puchased in 2003, I owned PC's. Now I own macs and won't go back. I am not rich, not elite and definitely can tell a well made piece of equipment when I see one. I'm tired of the vicious software vs hardware finger pointing. Tired of plug and play that isn't. Tired of the blue screen of death. And supremely tired of support that doesn't understand American English and can't deviate from their preprinted script of actions to take. This is the treatment you get from PC companies but not Apple.

[topgunb2]

If some one can afford a $1000 computer, what's the option? you've got millions of such users.

[Seaspray0]

Apple was not doing well when it was sitting side by side with the PC's in the major outlets... not when the PC's were about half the price. People look at what they need to do with a computer, and the one that does everything they need at the lowest price wins. The name calling just isn't going to cut it either... buying a $1million home does not make a $500 thousand home cheap if the $500 thousand home does everything you need it to do.

"The average selling price of a Mac desktop in the U.S. over the last six months was $1,503, while the average selling price of a Mac notebook was $1,493. Windows customers paid an average of $545 for their desktops over the last six months, while they paid $637 for their notebooks." (http://news.cnet.com/8301-13579_3-10187192-37.html)

The answer was obvious. Open stores where the competition isn't even represented. The problem here is, the stores are not cheap to run (especially in high realestate areas) and teenagers comming in only to log onto facebook isn't going to pay the bills. You can argue all you want, but I'll place my bet on what Brooke Crothers said in this article and not with a bunch of couch potatoe commentors think.

[rocketjam--2008]

must need some page views. articles about potential apple troubles are always good for a few thousand.

[john55440]

Apple's specialty is marketing pseudocool to gullible wannabes. Their computers are overpriced, and have fewer features than the competition.

"There's a sucker born every minute", even in a down economy. I don't anticipate an Apple store closings.

[JumpinJappold]

Fewer features are their BENEFIT.

[JumpinJappold]

Fewer features are their BENEFIT.

[BtmnHatesRbn]

Apple isn't "over-priced" which isn't a word. The word you seek, oh ignorant one, is "expensive. And Apple isn't expensive. MAC MINI MAC MINI MAC MINI.

Windows is for games, Mac is for work.

[topgunb2]

mac is for work? get your facts right, 90% of corporate world runs on windows

[alexanderhorre]

Apple Stores are the only stores I see with customers in them.

[Perry_Clease]

That is true. When I visit the San Diego Area Apple Stores the other stores in mall are usually quite busy.

[davidwb]

Dropped by the local Apple store this weekend after seeing a show. Guess I'm elitist since I attend live theatre, eh? I was checking out the 17 inch MacBook Pro which will set me back nearly $3K when I buy it. Guess I'm elitist because I'm not buying a $400 netbook with WinXP installed, eh? After I left I stopped next door at the StarBucks and bought a thin latte, paying $2.50 for my coffee. Guess that makes me elitist, eh? Maybe I am but I doubt everyone in the Apple store I visited was, and even if they were, the store was packed and people were buying. In the half hour I stayed I saw three new iMacs and half a dozen notebooks leave in the hands of happy buyers. I don't know how many iPods were purchased. But get this. I asked one of the salespeople how things were and she said, "It has slowed down a bit the last couple months - now we are busy instead of crazy busy." Yep, sounds like my store is about to close its doors.

[JumpinJappold]

Remember: Always concentrate on the competition instead of being the best you can be and you're sure to succeed!

(:

[BtmnHatesRbn]

I didn't have any money to blow before this phony, media-created to scare you economic recession, so is doesn't effect me at all.

I still spend $100 on comics, $500 on computer whatevers, and pay my bills and gas. Nothing's changed for me.

[Grizz2010]

Seriously? How much research did this author do before writing this article? If you look back at the last economic downturn in Apple retails young life you'll understand Apple uses times like these for re-growth. Is it really THAT hard to believe a company is finally evolving retail? I'm not too sure I'll be willing to read any articles written by this author again. Superficial observations are useless.

[BtmnHatesRbn]

When the recession actually started in April of 2000 (the real deal, not this phony recession the media made up and scared everybody into), Apple released the iPod, and a whole bunch of new iMacs, dual G4 towers, and laptops, and OSX.

[jean.luc.picard]

Like my brother says: "closed until business picks up." Not!

[Sharntel]

I like apple a lot but even if they are weathering this economic crisis, I feel they should take the rest of us in consideration and lower their prices. I know, wishful thinking however, in order to remain in that position the appeal should that of the economy that is struggling. I need a new laptop and I want the MacBook Pro, I have a Powerbook G4 now. However, I paid $1500 for the PB G4 which, we were not in recession or serious economic crisis then. Now is a different story. Although I want the MBP $2,200 is no match for a laptop that I can get for $899 again, just looking at the current economic situation.

Anyway, I will purchase the MBP eventually because it has everything that I need BUT I will wait until this summer when our state has the Tax Free weekend which will help to alleviate some of the cost.

S4

[tismeinaz]

Go to the Apple.com store and buy a refurb. You'll save a couple bucks and get a like new machine with a full warranty.

[BtmnHatesRbn]

MAC MNI MAC MINI MAC MINI

[PrettyStuzz]

I never used the word 'tony' before to mean high-falutin, but at the toniest mall here in Charlotte NC (America's Elite Banking Center), according to my sister, the Apple Store is always busy - she said it like someone who thinks everything Apple is overpriced-equals-elitist. My first Mac - in 1992 - (w/CD-ROM, printer, 2400 baud modem* and 12" monitor) cost around $4500 at Sears.

*modem = mo(dulate)dem(odulate)

[Jonnygthedrummer]

i live right near you, gettin a mac there soon, South Park mall

[SlimGem]

This article falls in with the same old drivel such as:

1. With all their cash, Apple should buy Circuit City, Dell, Adobe, etc.
2. Apple should let OS X be installed on any computer and licensed to any PC maker.
3. Apple should dump OS X and use Windows instead.
4. Apple should make a $300 netbook.
5. Apple should lower their prices to match Dell and HP.

Ideas like these are why these people are bloggers (or fast food workers) and not CEOs of successful multi-billion dollar companies.

[Perry_Clease]

I wish that Apple would buy Adobe. Then they could give the products a decent interface.

[fastfred1]

Naw ..... they can't buy Circuit City stores. Microsloth is gonna buy them and open their
own stores.

[BtmnHatesRbn]

I'll address your points one by one, because I'm bored.

1. Apple owns 19% of Adobe. See Episodes 2 and 3 of Bob Cringely's Revenge of the Nerds. It's on DVD. Find it.
2. Apple controls the quality of the OS by limiting the amount of hardware it is able to be installed. You want it, buy Apple's computers.
3. What are you? John Dvorack and an old Joy of Tech cartoon?
4. Netbooks suck ass. I want all of my apps on my own LOCAL computer, so I don't need to be on the 'Net or whatever to use my apps that I bought to use.
5. MAC MINI MAC MINI MAC MINI

Okay, that's that.

[topgunb2]

mac mini? you would have to carry a big monitor to take it to work, may be a portage generator as well, I wish apple would make affordable products instead of paying supporters like you!

[Seaspray0]

@slimgem. Those ideas are what alot of people want to see or they would never have been posted. A company that doesn't sell what people want won't make the sale. It's a two way street. The company can't survive without customers (i.e. bloggers and fast food workers). Maybe you're right, but there is the chance that you're wrong.