Apple Is the Most Productive Retailer, or Not
Nov 13th 2012 6:26AM
Apple Inc. (NASDAQ: AAPL) often has been described as the most productive of all retailers. The well-regarded annual productivity study from Retail Sails confirms this. But sales per square foot, which is the measure the research firm uses, may not be the single best yardstick.
Retail Sails puts the square foot sales of Apple stores at $6,050, according to its new 2012 Chain Store Productivity Guide. There is a cliff after Apple that drops to Tiffany (NYSE: TIF), which ranks number two with a per square foot yield of $3,017, and another sharp drop to lululemon athletica (NASDAQ: LULU) at $1,936 per square foot.
The rank is based solely on the measure of sales per square foot, which in turn relies to some extent on the prices of the products sold among the store chains in the study. Apple's products are extremely expensive. So are most products sold in Tiffany locations. The research does not take into account how many people work in these stores or what they are paid. Also not included is what the parent companies pay for rent at the locations, or the expenses to build the stores before they open. The cost of marketing to create foot traffic is left out as well.
Research about almost any subject is marked, and often flawed, by factors that are omitted. Methodology based on a very small number of factors makes measurements and rankings easier, and the methodology easier to understand. Once the number of factors grows into the dozens, the uninitiated find ranking impenetrable, because the results become based on weighting factors. Weighted factors are the stuff of judgment. Judgment gets called into question. Lists become more easily debatable. The lists become less useful, at least as far as the public's perception of them is concerned.
Even describing how methodology might be set is so complex that it is hardly worth the effort.
Methodology for this article: too complicated to explain.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Research, Retail Tagged: AAPL, featured, LULU, TIF