February 26, 2004 11:31 AM PST

Apple unveils 'hometown' San Francisco store

SAN FRANCISCO--Apple Computer staged a press event Thursday to show off its latest store, the "hometown" shop the company has been waiting to open for four years.

Apple, based in nearby Cupertino, has had its eye on a location in San Francisco's posh Union Square shopping district since it began opening stores in 2001. But the company wanted a standalone spot that was close to Market Street, the bustling thoroughfare that anchors the downtown financial district.

"Our very first priority was to get a spot in San Francisco, which is our hometown," said Apple retail head Ron Johnson. But, he said, this spot was "worth the wait."

The store, which opens Saturday, is one of several "high profile" stores the company is opening, on par with shops in Tokyo and on Chicago's Michigan Avenue. The two-level building features a glass staircase and huge skylight, as well as the "genius bar" and other features common to Apple stores. It shares its block with a wide assortment of stores, including a large Virgin Megastore, a Ghiardelli chocolate shop, and company stores for Birkenstock, Fossil and Benetton.

Apple opened its first stores in May of 2001 and now has 75 locations. Johnson compared that to specialty retailer Crate and Barrel, which has about the same number of stores.

The store will have 70 employees, Johnson said, who speak a total of 15 different languages.

"One language they all speak is Windows," quipped Johnson. "That's really important if you are trying to switch people to Macs."

Johnson said that half the customers at Apple's stores are buying their first Mac, helping fulfill part of the store's mission--to help attract Windows "switchers."

The stores are also increasingly important to Apple's bottom line, accounting for one out of every seven dollars of the company's overall revenue, Johnson said.

Apple faces a tricky balance with its stores, trying to expand the Mac market without encroaching too far on its other sales channels. The company is heading further into the turf occupied by independent Mac dealers, now offering same-day, on-site repairs and promising to meet competitors' prices.

In general though, the Apple store does not compete on price, eschewing sales in favor of occasional special events, such as offering, say, a 10 percent discount.

"I think promotional retail is a little dangerous," Johnson said. "You don't want (customers) to ever worry that, 'If I wait a week, I'll get a better price.'"

Johnson said that although the company was right in its initial idea for the stores--to show Macs in action connected to other digital devices--Apple has learned a few things since it entered the retail game.

For example, the company once asked its clerks to track the questions they were answering, but the company found that it took too long for them to log the information and took away from the number of customers they could serve.

 

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