Apple's Retail Growth Depends on European Expansion

Sep. 5.07 | About: Apple Inc. (AAPL)

By Carl Howe

Reader Tim McGuire pointed me at this thought-provoking article by David Sellers at noting that Apple's (NASDAQ:AAPL) upcoming launch of the iPhone in Europe is missing a crucial ingredient: a wealth of Apple retail stores. Unlike in the US, where Apple's 165+ stores were the places to buy an iPhone, Europe has exactly 11 Apple retail stores. Worse, 10 of those are sequestered in the United Kingdom -- the remaining store is in Milan, Italy -- and are therefore hard to reach for most European consumers. So if the iPhone is as big a phenomenon in Europe as it was in the US at launch, how is Apple going to serve continental European consumers? Are they expecting millions of them to line up outside the single continental Apple store in Milan? And how will they help European consumers when they invariably have problems with their phones?

Dennis raises more questions than he answers, but his point is excellent: Apple has turned its US retail operations into a stylish, profit engine, but the US is just one geography. And while Apple's concept of working through mobile phone partners in Europe is sound, it's not enough. As Apple learned with retailers like CompUSA and Best Buy, indirect retail sales move product, but they don't create the great and lasting consumer experience possible when one company is responsible for everything. So while deals with Orange, O2, and T-Mobile are a first step, Apple needs to do more.

Europe is already a more style-conscious and mobile phone-centric consumer base than the US and should represent a major focus for its future growth. When Apple first launched its retail stores in the US, it promised to open 25 of them that first year. Apple should set a similar goal of launching at least that many stores in Europe in 2008. More consumers live outside the US than in it. It's time to deliver to them the same great Apple retail experience that defines the Apple brand in the US. And there's no better time than now.