Apple's stores are cool, but in NZ you'll likely never see one without a plane ticket

Apple's new Union Square flagship store in San Francisco. The company has developed a new visual language for its  huge ...
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Apple's new Union Square flagship store in San Francisco. The company has developed a new visual language for its huge network of retail stores - but don't get your hopes up about an Auckland store.

ANALYSIS: In Apple's new store design - which will probably never come to New Zealand - you'll feel like the best possible version of yourself.

There are no checkout counters, no queues, no energy footprint and absolutely no sign that Apple has any plans for opening a store on our fair shores - but the wi-fi is really good!

At the San Francisco store I'm at, everyone is impeccably but casually dressed. Everything feels absurdly over designed. Each product is positioned perfectly on the imported oak tables - which won't be imported into Aotearoa any time soon - lit by huge windows, framed by living indoor trees.  

The plaza at the back of the new Apple store in San Francisco, which is open 24/7 and has free wi-fi.

The plaza at the back of the new Apple store in San Francisco, which is open 24/7 and has free wi-fi.

If you buy something, an employee will reach under the table and seemingly magic a receipt out of thin air, but they definitely won't magic a store into Britomart or Lambton Quay.

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The first floor, which has no supporting pillars and connects to just one wall, seems impossible at first.

Two-storey 13-metre-tall glass doors open up the front of the flagship store so fully that you basically feel like you're outside, right among the traffic and chatter of San Francisco's Union Square - and yes, even though San Francisco technically has a smaller population than Auckland, it still gets three Apple stores to Auckland's zero.

A space in the flagship Apple store for events and tutorials. The store's 13-metre tall doors open right onto the street.
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A space in the flagship Apple store for events and tutorials. The store's 13-metre tall doors open right onto the street.

I'm on this tour of Apple's new Union Square location, where they are showing off their updated retail design, with one other Kiwi journo and a bunch of Australians.

Of course, any Apple store is new to us - there isn't a single one of them in New Zealand, despite the fact we buy over $700 million of Apple products a year.

Apple is happy to talk about all the design work that went into this oddly inspiring monument of a building, but unsurprisingly refuse to comment on whether Apple is eying up New Zealand for a store.

The actual store part of the new Apple store, with real people in it.
HENRY COOKE/FAIRFAX NZ

The actual store part of the new Apple store, with real people in it.

I've been covering Apple for a number of years now, so this dance is rather familiar. As ever, I'm a bit of pessimist.

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When you think about it, the lack of stores makes plenty of sense. It's the same reason we don't have an Ikea: New Zealand is a somewhat small market at the very end of the logistical world. 

Getting products here is hard, getting all the absurdly specialised materials of a new store (extremely large panes of glass, eastern European oak, helpful employees) is even harder.

An Apple store in Istanbul. It's much easier to build new stores in a country that isn't an island in the deep Pacific.
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An Apple store in Istanbul. It's much easier to build new stores in a country that isn't an island in the deep Pacific.

We're locked in by the ocean, and our cities aren't as surrounded by huge suburban populations - San Francisco may only have 800,000 residents, but the wider Bay Area has over seven million.

It's an economy of scale world, and we simply don't have the scale.

Still, it's a bit jarring that cities like Wauwatosa in Wisconsin (population just under 50,000 - around that of Invercargill) have Apple stores, even if it is much easier for Apple to ship the necessary materials within the United States.

After all, these stores boast the most profitable retail real estate in the world, with each square metre reportedly generating NZ$73,214 of sales a year. 

Given how much Kiwis spent  on Apple products last year, one assumes that number would only grow were we able to take our MacBooks into genius appointments, or try iPhones out without a telco rep bothering us, or see an iPad in the flesh rather than online.

Apple doesn't just use the stores to sell products. It does a huge amount of on-site troubleshooting, device and photography tutorials, and general branding within their stores. People regularly come in just to charge their devices, or use the wi-fi.

Apple analyst Horace Dediu estimated in 2011 that a brand new Apple store costs around NZ$14 million, and you can assume that price would go up given the expense of getting everything here. Still, if they're pulling in over NZ$700m in revenue from us that hardly seems absurd. 

But then, apparently, Apple actually makes very little profit in New Zealand - just NZ$17.7m in the financial year ending September 2015. This means their tax bill is rather low, at just NZ$8.9m.

This low low tax bill isn't new, or at all unique to Apple. As John Campbell observed of the company's 2014 returns, the company appears to be spending 97 per cent of its revenue on costs of sale in New Zealand, which seems odd given they don't operate a single store here, and have a very light corporate footprint.

Apple has been accused of tax minimisation in Australia too - where it operates 22 stores. Still, perhaps it wouldn't look good for a company that is apparently operating so tightly to make a splashy new investment.

Then you have to seriously ask yourself what the company - the largest in the world by market cap - has to gain here. We are already bigger iPhone fans than most of the world, have quite high smartphone penetration, are used to buying things online, and our population growth is quite steady. 

It makes much more sense to pour money into China, where the middle class expands by thousands of people a day, than New Zealand, where your sales might climb a bit faster but will never really explode.

So given the logistical constraints and our rather boring population projections, I doubt we'll see an Apple store in New Zealand before the end of this decade, if ever.

Then, I was surprised when Apple started releasing iPhones and other products in New Zealand on the same day as they do in all their other first tier countries, so there is definitely hope for eager Apple fans.

For now, you'll have to make do with that one corner of JB HiFi.

Henry Cooke travelled to San Francisco courtesy of Apple.

 - Stuff

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