Apple should ditch sales 'imbalance' and build more stores

The number of Apple Stores worldwide is lagging behind the booming sales at the company, an analyst has said.
Written by Liam Tung, Contributing Writer
Apple Store
Apple Stores are not spreading fast enough compared to the company's rise in sales.

Apple's retail stores are often viewed as the cornerstone to its success in the US and internationally, but they've become a smaller and smaller component of its overall sales, according to new numbers by Asymco mobile sector analyst Horace Dediu.

The company opens about 30 to 40 new retail stores each year, but that's remarkably flat compared with sales growth, according to Dediu, and highlights why Apple is focussing on new international outlets over the US.

The analyst notes that in 2007, when Apple's net sales grew at $7bn a year, it opened 34 stores, most of which were located in the US. In 2012, sales grew about $37bn or five times the 2007 rate, but only 41 new stores were opened. (An interesting aside that Dediu notes in an earlier analysis is that Apple's store employment grew by seven times during this period, from 6,400 in 2007 to 42,200 in Q1 2012.) 

Still, he calls Apple's retail store growth rate of 33 percent between the periods "frustratingly slow", leading to more sales occurring outside its retail store channel. Dediu notes that in 2007 retail revenues were $4.7bn, or 17 percent of Apple's total, falling to 12 percent, or $19.1bn, by 2012.

But the analysis suggests that the mix of US versus international retail openings rather than just the speed of openings is the problem.

Not enough international stores?

US stores account for 63 percent of its roughly 400 retail outlets worldwide today but about 37 percent of Apple's revenue. At the other extreme, China has accounted for between 19 and 13 percent of its revenues in recent quarters, but is home to only three percent of Apple's stores. Europe meanwhile accounts for 23 percent of sales and has 22 percent of its stores.

Perhaps Apple has not been fast enough to align its retail strategy with sales, but it is addressing the issue. Dediu notes that in 2012 only 15 percent of Apple's 30-odd new retail stores opened in the US, which is a trend he expects will continue to correct the "sales/retail presence imbalance".

Apple did actually outline this in its 10K SEC filing (PDF) from September 2012, which notes that three-quarters of the 30 to 35 new stores will open outside the US. 

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