Tim Cook, chief executive officer of Apple Inc. (NASDAQ:AAPL), is aiming to sell as much as 50% of new iPhones in the United States through the company’s own retail stores. However, this objective might be impossible to achieve.
According to a report from AllThingsD, Cook was disappointed by the fact that the retail stores of Apple Inc. (NASDAQ:AAPL) sold only 20% of all iPhones, and he wants the number to increase.
ValueWalk's Raul Panganiban interviews William Burckart, The Investment Integration Project’s President and COO, and discuss his recent book that he co-authored, “21st Century Investing: Redirecting Financial Strategies to Drive System Change”. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors.
Apple Hoping to Use iPhones to Upsell Other Products
Last year, during the Goldman Sachs Technology and Internet Conference, Cook emphasized the significance of the popularity of the iPhone in paving the way for creating consumer awareness for other Apple Inc. (NASDAQ:AAPL)products. According to Cook, “What is clearly happening now is that the iPhone is creating a halo for the Macintosh. The iPhone has also created a halo for iPad.”
Based on Cook’s statement, we can understand that increasing the number of consumers purchasing iPhones from Apple Inc. (NASDAQ:AAPL)’s retail stores could also increase sales of its other products and services.
Tim Cook’s Goal Unrealistic
However, an analysis conducted by Consumer Intelligence Research Partners (CIRP) showed that Cook’s objective to increase iPhone sales through Apple Inc. (NASDAQ:AAPL)’s own retail stores by nearly 50% is unattainable.
The research firm emphasized that the major challenge to accomplish Cook’s target is the fact the Apple Inc. (NASDAQ:AAPL) has only 250 retail stores (majority are already experiencing high-volume of customer traffic) compared with the total number of stores (approximately 9,000) operated by its carrier partners.
According to CIRP, the tech giant needs to increase the size of its retail footprint to capture the sales of other stores selling iPhones.
Apple Stores Already Jammed
Michael Levin, co-founder of CIRP said, “We don’t know, exactly, how Apple can realistically meet Cook’s goals. However, one defines those goals, we can’t see how their mostly jammed stores can handle more customers, sales associates and inventory.”
Based on the observation of CIRP, Apple Inc. (NASDAQ:AAPL) also needs to increase its sales capacity. According to the research firm, the tech giant’s retail stores generally run out of capacity for new iPhones.
Cook’s objective is difficult, but it might be possible if it will resolve some of the challenges confronting it. The chart below shows the percentage of iPhone sales from different stores.