From the re-worked store listing page at Apple, I calculate that retail presence comparing stores opened in the US to those located outside the US are presently a split of 87 percent to 13 percent for the 210 opened stores.
A fifty percent split using today's 210 total calculates to 105 stores to be located outside the US with today's total number of stores. There are at present 183 stores located in the US vs 27 outside the US. That is quite a few short of a balance.
So far this fiscal year there has been 18 new stores opened in the US and 6 outside the US (all in the UK) by my count.
Apple Chief Financial Officer Peter Oppenheimer at the last financial analyst conference call indicated an increase in the number of stores to be opened this fiscal year from 30 to around 45 and acknowledged the emphasis to getting more international stores opened as well. He specifically mentioned China, Switzerland and Australia. Australia was mentioned in the previous year's remarks but no store opened despite the passing of time.
If the opening rate of stores was further increased to 50 stores per year and all of them were to be located outside the US, three years would still not quite enough to reach a 50 percent split (this ignores what happens in the remainder of this fiscal year in openings and assumes none of the opened US stores close up).
That type of lopsided opening strategy would mean a complete change from the past and a whole lot of international based work by Apple Retail that perhaps are not the best to do that kind of work. They have not been really able to accomplish anything like it so far to date. Why? It is hard work. It requires understanding in how to reach success in each new market and culture; and that requires a greater deal of applied patience and flexibility out of Cupertino especially in trying to match the successful pattern and template of store that has been followed so far. The language differences alone makes it harder yet to sign an agreement for premises that may be using French or German or Thai. Then there is the time difference, travel time, and holiday differences.
I calculate that 95 percent of the Apple retail stores operate in areas/markets where the first language is English and that will have to change with any expansion into countries where 100 percent of the population prefer to speak their non-English language. This alone requires more bilingual capabilities in managers and staff just to get a store open for business.
Most American managers working domestically in the US will not be exposed to working life outside the US borders. The few differences in operating between domestic states, as well as the local society and habits are much less than what they encounter when operating between countries and regions.
The European Union web site lists it pages in 22 languages for its 27 member countries. For the last ten years, the goal of a single currency, the Euro, has only been adopted in 15 countries. That means there are another 12 currencies. How many can you count in? Many American managers working in the US may have only have exposure to one language in a greatly unified market with one currency over their entire career and have never had language lessons other than English.
Every air flight out of the airports in Hong Kong and Singapore is an international flight so one does not forget the passport, the visa requirement of where you are landing, the types of currency needed and driving licenses you may need as well as the time to clear the customs check and immigration queue. The announcements at the airports and on the plane will be in at least two languages possibly neither being English. Roman lettering may not be seen any more as non-Roman scripts or characters may be substituted. One is immediately forced to start adapting for the simplest of tasks yet alone finding retail locations and training a staff.
But yet it can be done and business proceeds every single day in these places.
In twenty-five years of living outside the US after being raised a mere 50 miles south of Cupertino for the first twenty four years, I realize the correlation of the lack of international living experience and understanding of differences in markets, society and culture have often led to less than stellar performance by American-based companies (and their managers) operating outside their borders, including those "borders of experience". A much broader set of skills and viewpoints are required for "better" performance in reaching an increased international retail presence (of so many unique and different countries) and Apple is no exception.
Another Ron Johnson and team with the necessary international savvy should be built up as it is required for execution of opening more stores outside the US borders as stated and "hoped for." Peter Oppenheimer and Ron Johnson have talked the talk, so it is time to walk the walk.
Before I wrap up this article, I offer my congratulations to Ron Johnson's retail team on the past quarter's record performance. You have made retail history and that will be noted in every marketing textbook and retail research undertaking in the future. I want to encourage you to repeat the success internationally and build up the team(s) with right set of skills to obtain that international success. If the average revenue per store record of $7.1 million falls back to $4.8 million of last year, so be it. Provided it is still profitable to operate a store and achieve expanded Apple Store retail experiences to local customers who can't get them now, it will be best for the Apple brand and Mac share market long term to have more retail presence in other countries than the just the home market or even a retail record of the greatest revenue per square foot.
Or should we make that into square metre?
How would you approach it?
(Columnist Gaurang Donovan is a “mystery man†who wishes to keep his identify secret for personal and business reasons—Dennis)