Inside Apple Stores, a Certain Aura Enchants the Faithful

It was 2 o’clock in the morning but in the subterranean retailing mecca in Midtown Manhattan, otherwise known as the Apple store, it might as well have been midafternoon.

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Even late at night, there are customers on the floor of the Apple store in Midtown Manhattan. Apple now makes about 20 percent of its revenue from its brick-and-mortar stores.

Late one night shortly before Christmas, parents pushed strollers and tourists straight off the plane mingled with nocturnal New Yorkers, clicking through iPod playlists, cruising the Internet on MacBooks, and touch-padding their way around iPhones.

And through the night, cheerful sales staff stayed busy, ringing up customers at the main checkout counter and on hand-held devices in an uninterrupted stream of brick-and-mortar commerce.

The party inside that store and in 203 other Apple stores around the world is one reason the company’s stock is up nearly 135 percent for the year. By contrast, high-flying Google is up about 52 percent, while the tech-dominated Nasdaq index is up 12 percent.

The popularity of the iPhone and iPod and the intended halo effect those products have had on sales of Apple computers are behind Apple’s vigor. But the company’s success in retailing, as other competitors struggle to eke out sales growth, has been the bonus.

Apple now derives 20 percent of its revenue from its physical stores. And the number is growing. In the fourth quarter in 2007, which ended Sept. 30, Apple reported that the retail stores accounted for .25 billion of Apple’s .2 billion in revenues, a 42 percent increase over the fourth quarter in 2006.

Apple stores generate sales at the rate of about ,000 per square foot a year, according to a report last year by Sanford C. Bernstein analysts.

As other electronics makers like Dell, Nokia and Sony still struggle to find the right retail formula, Apple seems to have perfected it.

Not only has the company made many of its stores feel like gathering places, but the bright lights and equally bright acoustics create a buzz that makes customers feel more like they are at an event than a retail store.

The close attention paid to detail in the stores’ designs, such as the maple veneer tables used for product displays, gives the impression that Steven P. Jobs himself, the company’s co-founder and chief executive, signed off on every square aesthetic inch of every store.

“Apple’s retail offering is very compelling,” said Andrew Neff, senior managing director at Bear Stearns, “but the other key is the product. The retail concept ties in very much to the product.”

But the secret formula may be the personal attention paid to customers by sales staff. Relentlessly smiling employees roam the floor, carrying hand-held terminals for instant credit-card swiping. Technicians work behind the so-called genius bar, ministering to customers’ ailing iPods, MacBooks and iPhones. Others, designated “personal trainers,” give one-on-one instruction and lead workshops.

Personal shoppers are available by appointment, and last month the company took the concept of personalized service to a new level, with concierge teams stationed throughout each store.

“They’ve become the Nordstrom of technology,” said Michael Gartenberg, vice president and research director at Jupiter Research, referring to the department store that is known for its service.

Ron Johnson, Apple’s senior vice president for retail, said he believed the high level of service played a large role in the success of the stores.

“The idea is that while people love to come to retail stores, and they do it all the time, what they really appreciate the most is that undivided personal attention,” Mr. Johnson said. The result is far fewer qualms among consumers about paying premium prices: for an iPhone case, 0 for an iPod Nano or ,200 for a computer.

This month, Apple opened its third Manhattan store, in a three-story, 10,500-square-foot renovated building in the meatpacking district on West 14th Street. With one entire floor dedicated to individualized services, along with small seminar series, Mr. Johnson’s goal is to make the 14th Street store “the most personal store ever created.”

Mr. Gartenberg said people often first go to an Apple store out of curiosity. “Apparently a lot of them like what they’re seeing in the stores, they like the experience and they go back to buy the products,” he said.

The stores’ architecture also makes consumers feel good about spending money there.

In nearly a dozen high-profile urban centers — including New York, San Francisco, London and Glasgow — the signature feature is a glass staircase. Some of the staircases go straight up and others ascend in a spiral skein that appears to be held in place by nothing more than Apple hype.

A customer entered the 14th Street store last week with his two whippets. Their reaction to the impressive stairs was more fear than awe. When the dogs refused to climb the steps, their owner scooped both of them into his arms and carried them up.

Apple stores encourage a lot of purchasing, to be sure. But they also encourage lingering, with dozens of fully functioning computers, iPods and iPhones for visitors to try — for hours on end.

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