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Fortune, in its story about how Apple Inc. (formerly Apple Computer) is one of America’s most admired companies, describes Apple as “America’s best shopkeeper.

The numbers alone are impressive. Fortune writes: “Saks…generates sales of $362 per square foot a year. Best Buy stores turn $930 - tops for electronics retailers - while Tiffany & Co. takes in $2,666. Audrey Hepburn liked Tiffany's for breakfast. But at $4,032, Apple is eating everyone's lunch.

“That astonishing number, from a Sanford C. Bernstein report, is merely the average of Apple's 174 stores, which attract 13,800 visitors a week…In 2004, Apple reached $1 billion in annual sales faster than any retailer in history; last year, sales reached $1 billion a quarter.” And Fortune notes that almost all of the traffic and all of the sales come because Apple keeps coming up with must-see and must-have products, the latest of which are Apple TV (which allows one to play movies and television programs that are on one’s computer wirelessly on a nearby flat screen TV) and, most notable, the iPhone (which combines the attributes of the iPod, a mobile phone and a computer).

And yet, Apple CEO Steve Jobs says that the company got into retailing primarily out of fear – Apple was dependent on mega-retailers for sales, and those retailers had little if any incentive to sell – really sell – the company’s products and position them as unique in the marketplace. Jobs says, "It was like, 'We have to do something, or we're going to be a victim of the plate tectonics. And we have to think different about this. We have to innovate here.'"

One key insight came when Apple – at the urging of then-Gap CEO Mickey Drexler – developed a prototype inside a warehouse, rather than opening it to consumers. In doing so, the company realized that it had laid out the store according to its own priorities, rather than how consumers might want to buy things.

"So we redesigned it," Jobs says, even though it delayed the company’s plans by as much as nine months. “But it was the right decision by a million miles." Fortune writes: “When the first store finally opened, in Tysons Corner, Va., only a quarter of it was about product. The rest was arranged around interests: along the right wall, photos, videos, kids; on the left, problems.”

Another area was – no pun intended – a real stroke of genius: the Genius Bar, designed to provide free on-site technical support and training. The model was a hotel concierge desk, which is there to help, not sell things.

And the company keeps innovating.

The most striking thing, Fortune suggests, “is what you don't see. No. 1: clutter. Jobs has focused Apple's resources on fewer than 20 products, and those have steadily been shrinking in size. Backroom inventory, then, can shrink in physical volume even as sales volume grows. Also missing, at the newest stores, anyway, is a checkout counter. The system Apple developed, EasyPay, lets salespeople wander the floor with wireless credit-card readers and ask, ‘Would you like to pay for that?’”

A question that, evidently, they are asking more and more.
KC's View:
Now, to be honest, we have a bias toward Apple. Actually, it is a passion for Apple. Between work and home, our family has six Macintosh computers and seven iPods…and our plan is to acquire Apple TV and an iPhone as soon as they become available.

But here’s one thing that we can tell you about the Apple Store. Whenever we walk by one, no matter what we’re doing or where we are going – whether we’ve been in New York City, San Francisco, Chicago, Santa Monica, London, White Plains (NY) or Stamford (Connecticut) – we wander in and see what’s going on.

Which is the best thing one can say about any retailer.