Donovan’s Views: some thoughts on Apple’s global expansion plans

Posted by Dennis Sellers Jun 27, 2008 at 8:55pm

By Gaurang Donovan

Garry Barker of the Fairfax Digital group in Australia has written an article in the Sydney Morning Herald revealing some interesting information from his interview with Apple’s senior vice-president for retail Ron Johnson.

It provided further information on Apple’s retail efforts in Australia that revealed more possible locations for future Apple Stores in Melbourne, the capital city of the state of Victoria with a population of 3.5 million people. The article claims more than 350 million people have visited the 215 Apple stores in six countries on four continents.

The article mentioned Ron Johnson as saying that Apple would continue to open 45 stores a year and that the long rumoured Chadstone store in Melbourne was to be opening soon. He stated that a lot of stores are going to be opening in Australia and mentioned the largest regional cities of Perth, Adelaide and Brisbane. Johnson also mentioned the names of other locations in Melbourne that have already been surveyed for possible future stores.

With multiple locations in the five major cities, it is “easy” to provide a store to the majority of the Australian population. Apple is finally seeing this and beginning to execute their plans toward that goal.

Knowing something of Melbourne I can add Apple Retail and Ron Johnson have done their preparatory work and are looking in the right places for possible retail store locations in Melbourne—if the stores pan out in the mentioned locations. Full marks to the team and for that effort of being on the ball.

The recently opened Sydney landmark store was also a good decision and a good location as well. The store opening was very successful and generated a huge amount of media coverage here. It is a first good start.

But while praising their efforts I must state Apple Retail reiterated a stated opinion that they are just not thinking grand enough in terms of the numbers of stores to open, especially outside the US and in places that English is not the first language. I would think 45 stores outside the US borders alone would be the better goal to aim for and there are plenty of locations to reach greater populations of individuals who have the matching disposable incomes in many of the US Apple Store locations.

Sydney’s four million people can now say they have one very nice, big, new store and it is only a nine-hour drive for the 3.5 million people of Melbourne. When the Chadstone store in Melbourne opens they will each have one per city. The 45-hour drive (with no stopping) to Sydney from Perth (population 1.5 million) will be safely ignored in this discussion despite incomes growing fastest there due to the mining boom.

In direct comparison the two nearest Apple Stores from my place of birth in Californa are Los Gatos (population 29,000) and San Luis Obispo (population 44,000 with an additional 18,000 students at Cal Poly) in California. Los Gatos is about an hour up the road driving to the north along Highway 101 and San Luis is about two hours to the south.

3.5 million versus 73,000. Hmm.

Now there is a rumoured future store in Monterey’s Del Monte Center to fill the 160 mile gap between those two stores, and that would serve the greater Monterey Bay towns of Monterey (population 36,000), Pacific Grove (population 16,000), Carmel (population 4,000), Seaside (population 33,000) We could also include nearby Salinas (population 148,000), and let’s throw in Chualar (population 1500) as well. That totals up to about 230,000 people. Carmel and Monterey and Pacfic Grove have many wealthy individuals, but there are just not that many of them.

It took a long time for Apple Retail to see the 21 million population in the Australian market as a market for its stores and products. They will be profitable, they will be frequented, and they will be appreciated. It is a no-brainer.

And the population is much greater than Los Gatos, San Luis Obispo and Monterey Bay combined.

Now Australia is still an English speaking country, and I once again call for the reinforcement of the Apple Retail team with people familiar with other countries and languages and concentration on pockets/markets of the world where they can grow their retail coverage profitably despite it being in another language. Others do it every day of the business week, and it is about time Cupertino expand their thinking on this possibility. I applaud the thinking of opening multiple stores in one country and I am specifically thinking here of the rumour of stores in Geneva and Zürich in Switzerland. I would hope Bern and Basel could be next and the greater majority of the Swiss population would be covered. It would also be good for European expansion and for retail experiences in two of four languages of Switzerland than may help out in retail efforts in France and Germany.

Finally, below is some added commentary on Melbourne sites that I hope I have correct as I have only been familiar with Melbourne and the other four largest Australian cities for the last 10 years while Beijing and Hong Kong were home. Perhaps some Melbournians can correct any mistakes and contribute their thoughts as well. By the way, I would be amiss not to mention that the combined populations of Beijing and Hong Kong are greater than the population of Australia and incomes in Hong Kong are very much higher than in Beijing and Melbourne.

Added commentary

The Central Business District of Melbourne is rectangular in shape and there is access to Apple resellers on three of its side. In that sense it is “covered” while other parts of Melbourne go uncovered. I feel two of the resellers have good sized stores; the store personnel have been friendly and helpful every time I have stopped in.

Chadston Shopping Centre is the biggest mall in Melbourne and has not housed a reseller as rents and lease requirements prohibited it. It is located far enough out of the Central Business District not be thought of as “in the city” but more in the suburb. It is probably the busiest in Melbourne, especially on Christmas holidays and it serves the southern part of Melbourne. An Apple presence is well-placed there for catching the mall crowd that has never had exposure to all of Apple products.

Chapel Street is the main shopping street and is known as such. A store there would be more of a landmark. It is very near what is perhaps the most expensive suburb of Toorak.

The mention of a Doncaster site is interesting and it could be Westfield’s Shoppingtown. It is interesting as that part of Melbourne is “under-represented” with Apple resellers despite it containing several suburbs of people with larger disposable incomes. Shoppingtown’s renovation and “upgrading” is just finishing up and its parking and shopping area are greatly enlarged.

The restaurant and shops opened have improved the appearance and thus ambience from its previous older and tired look and feel. It still has a large bus terminal and is a transfer point for many routes in that regard. It is one of the bigger malls in the northeast of Melbourne and is conveniently located close to the northern end of the Eastern Freeway that runs from the north into the city. The Doncaster turnoffs are close the Eastern Link toll road, the major new city bypass running north to the south that is due to open on the 29th of this month.

(Columnist Gaurang Donovan is an Australian “mystery man” who wishes to keep his identify secret for personal and business reasons—Dennis)

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