Apple readies its first store in Maryland

Computer company plans opening Saturday at Towson Town Center

41st outlet in nation

Move into retail is viewed as improving introduction of products to customers

September 30, 2002|By Andrew Ratner | Andrew Ratner,SUN STAFF

Apple Computer Inc. is putting the finishing touches on its first store in Maryland - the latest move in a strategy the company launched last year to better introduce its products to consumers.

The company plans to open a store Saturday at Towson Town Center. The 4,000-square foot store will be Apple's 41st in the nation and the third in this region. It unveiled its retail concept nationally at Tysons Corner in May last year and followed with a second store in Northern Virginia in December.

As have many computer companies, Apple has struggled this year as economic uncertainty has dampened spending.

The company's stock rose 2 cents Friday to $14.72, less than half its trading price of five months ago. Industry analyst International Data Corp. expects consumer purchases of computers to remain little changed in the United States next year and also recently trimmed its expectations for worldwide growth.

Nevertheless, at Apple, company executives and industry analysts believe that the stores are helping solve the problem of being easily recognized but little understood. The company has about 5 percent of the U.S. market, where most personal computers use Microsoft Corp.'s Windows operating system.

Like Apple's arty advertising campaigns, the store image is hip and sophisticated, staffed by "Mac geniuses" who answer customers' questions and who must pass tests of product knowledge. Visitors are encouraged to film digital movies or "burn" music compact discs at the stores, the sorts of "multimedia" activities that are considered a strength of Apple's products.

"It's the only place to shop for a Mac, in my opinion. The employees are really young intelligent `Macheads,'" said Charles R. Wolf, an investment analyst who follows Apple for Needham & Co. in New York. "If you look at revenue generated by each store, it has been a terrific success."

Although long considered an innovator in personal computing, the Cupertino, Calif.-based company was frustrated years ago that it had seemingly stalled in the marketplace, partly because its products had lackluster placement in "big box" electronics stores. But with the return in 1997 of Steven P. Jobs to the company he'd helped found 20 years earlier, the company had a resurgence with attention-grabbing products such as its colorful translucent iMac computers and iPod miniature music players.

Apple plans to open 25 stores this year, the same number it opened last year. It also placed an employee in most CompUSA stores to provide more dedicated service and promotion for its products.

Apple's stores are averaging about $10 million in sales a year and about 4,000 visitors a week. During the summer, a new 15,000-square-foot "showcase" store in New York's SoHo area attracted about 100,000 visits in its first month.

Apple recently added stores in Houston and St. Louis and plans to open almost one a week during the rest of 2002, including one in November in King of Prussia, Pa.

"They're placing stores in destinations, not trying to make the store a destination in itself. Your wife is looking in the shoe store, and you wander into the Apple store," said Joseph Beaulieu, an analyst for Morningstar Inc. in Chicago. "A lot of times, it takes people two or three visits ... to take the plunge."

Apple's retail operation didn't break even last year and might struggle to do so this year.

Ron Johnson, a senior vice president, acknowledged that the company "picked a pretty difficult time to open a retail chain," just months before the terrorist attacks last year and a run of corporate misdeeds sapped consumer confidence. But the company thinks its retail maneuver is suited for the long run as Americans become more comfortable with personal computers and related devices, such as digital cameras.

"Steve [Jobs] has talked about the three waves of computers. In the 1980s, it was productivity-driven, with people moving from typewriters to word processors. The second wave was the Internet boom in the 1990s with people getting online and the third wave will be people living a `digital lifestyle,'" Johnson said.

Apple is also scouting Montgomery County for another Maryland location. But it doesn't plan to open a lot of stores, aiming instead to have a few in major metropolitan areas. By the end of the year, its 50 stores will be positioned within 15 miles of 61 million people, one-fourth of the U.S. population.

"You don't need to be everywhere," said Brett Miller, an A.G. Edwards & Sons technology analyst in St. Louis. "If you have stores in the right places, retail works."

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