Earlier this week, Bloomberg had an intriguing piece about Apple. The article explained that it may very well be the highest grossing retailer on New York City's posh Fifth Avenue. And that's not just because the economy is so bad -- the statement holds during good times as well. With some boutiques like Chanel and Louis Vuitton earning thousands of dollars on their products and others like Tiffany & Co. or Harry Winston fetching tens and hundreds of thousands on some of its inventory, that's pretty impressive. So what's the secret to Apple's success? Its products provide both form and function.
First, here's the Bloomberg's explanation:
Apple's Fifth Avenue emporium probably has annual sales of more than $350 million, topping any of the chain's other outlets, said Jeffrey Roseman, executive vice president of real- estate broker Newmark Knight Frank Retail in New York. The location is 10,000 square feet, putting its sales per square foot at a minimum of $35,000, based on Roseman's estimate.
That's the equivalent of selling one Mercedes-Benz C300 sedan per square foot. Apple may be the highest grossing retailer ever on Fifth Avenue, said Faith Hope Consolo, chairman of the retail leasing and sales division at Manhattan-based Prudential Douglas Elliman Real Estate. Apple doesn't disclose store-specific revenue, said Amy Bessette, a spokeswoman at the company.
By comparison, the sales floor at Tiffany & Co. sells as much as $18,000 per square foot, Consolo said. Another famous Fifth Avenue jeweler, Harry Winston Diamond Corp., sells between $12,000 and $13,000, she said. When asked to comment on Consolo's estimate, a spokesman at New York-based Tiffany said the number was too high. Toronto-based Harry Winston doesn't provide individual-store performance figures, said a company spokesman.
I think it's actually kind of obvious what Apple's products have that the other fancy retailers' products don't: functionality. Sure, you can put stuff in your Gucci purse you just bought for a few grand, but you can just as effectively put your stuff in a canvas sack that costs a few bucks. The Gucci purse doesn't really work any better, it just looks nicer.
Let's use the iPhone as the prototypical example of an Apple product. Its extraordinary functionality is virtually unparalleled. Yet, its design is equally as sleek and brilliant. It would be like if Jimmy Choo designed a shoe that was not only beautiful, but also never got dirty or wore out -- and required you to use less energy when walking. Sadly, no such shoe exists at Jimmy Choo, to my knowledge.
Apple's marriage of form and function also helps to justify its price tags. The result: despite the deep recession, people are still spending money on items like the iPhone. And that's why, even at a time like this, the Fifth Avenue Apple Store is pure mayhem.
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