Of Apple Stores and Automakers

On this day in economic and business history ...

The first Apple (NASDAQ: AAPL  ) Store opened to the public at 10 in the morning on May 19, 2001. Situated in the luxe Tysons Corner Center in McLean, a Virginia suburb of Washington, D.C., it was Apple's beachhead to the retail market, and three hours later it was joined by a second Apple store in Glendale, Calif. It was also seen as a big risk.

Apple was coming off several straight quarterly losses and was still just a computer company -- the first iPod wasn't released until later that year. PC competitors were closing their own dedicated stores as the dot-com bust crunched profits and dented interest. It took a certain boldness to open stores dedicated to a very narrow product lineup, consisting then of Macs and iMacs. Tech journalist Joe Wilcox was there to experience the first Apple Store for himself, and here are some of his key takeaways:

I was surprised at the time that Apple didn't locate in the posher [Tysons Galleria, or Tysons II] mall, which seemed to click more with the Mac demographic. But Tysons I had more foot traffic. When Apple Store opened, Tysons Corner Center averaged about 57,000 customers a day -- or more than 21 million shoppers a year.

Apple Store's look was unique and quite distinctive in 2001, particularly for a shop selling computers. Here's how I described it 10 years ago today: "The store sports hardwood floors, high ceilings, bright lights and clean lines -- similar to the look of the trendy clothing retailer Gap (NYSE: GPS  ) . The similarity is not surprising, considering Mickey Drexler, CEO of the Gap, is a member of Apple's board." San Francisco-based Fisher Development, which also constructed Gap stores, built the first Apple retail shops. "Contributing to the clean look of the store is the lack of network cables connecting computers to the Internet, as Apple has incorporated AirPort wireless networking to link Macs and other products to the Net."

Some of the first store's features now seem positively quaint. With only one primary product -- computers -- Apple divided the store into quadrants, each devoted to a different computing tier. There was a "software alley" that included some non-Apple peripherals. You could burn CDs in the store! Now you can't even find a DVD drive, let alone a CD drive, on most Apple computers.

Those first two stores welcomed 7,700 visitors in their first two days of operation and sold $600,000 worth of Apple products during those two days. Even then, the fanaticism of Apple fans was evident, as several hundred people camped out hours before the opening to be the first inside. After a decade of Apple Stores, the company had grown its retail footprint to 323 locations in 11 countries, which had welcomed a total of 1 billion visitors through their doors since the first store opened. By then, Apple Stores had become by far the most efficient retail locations in the world in sales per square foot of space, trouncing second-place contender Tiffany by roughly 2-to-1. Tiffany's $3,000 in sales per square foot was once the gold standard, but Apple earned just over $6,000 per square foot in every store for 2012.

The first General of the automakers
Buick was incorporated on May 19, 1903. When General Motors (NYSE: GM  ) was founded five years later, Buick became its first nameplate -- General Motors was, in fact, originally created as a holding company for Buick. By this point, founder David Buick had been pushed out of the company, and its new owner installed William C. Durant to manage the growing automaker. Under Durant's leadership, Buick and GM grew to become America's largest automaker in the days before Ford (NYSE: F  ) pioneered the assembly line. This success enabled a GM to go on a buying spree, and before long the company amassed several familiar nameplates: Oldsmobile and Cadillac were added by 1909, and Durant's ouster and later return during the 1910s brought Chevrolet into the mix as well.

However, GM began falling behind Ford following the development of the assembly line. Ford's commitment to one low-cost model, churned out by the millions, outpaced GM's complex (but forward-thinking) strategy of developing different brands and models to appeal to different segments of the population. By 1923, GM had built a million Chevys, but a year later Ford built its 10 millionth Model T. Even though GM trailed Ford for years, it became the first automaker ever added to the Dow Jones Industrial Average (DJINDICES: ^DJI  ) in 1915 (and began its tenure as the longest-serving component automaker when re-added in 1925) thanks to Durant's embrace of the public markets, in stark contrast to Ford's reluctance -- the Model T maker didn't go public until 1956.

Through it all, Buick was on the forefront of automotive design -- a 1904 model is still considered optimally engineered a century later, and Buick also produced closed-body cars before Ford and would advance engine technology throughout the '20s and '30s -- but its near-luxury marquee (second only to Cadillac in prestige) kept it from ever becoming a true mass-market brand. A century after Buick's incorporation, Chevrolet remains by far the leading GM nameplate, with about 10 times as many vehicle sales as Buick in any given month.

Apple has a history of cranking out revolutionary products ... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.


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