Apple expands 'Express' retail store format ahead of holiday season

[October 22, 2020]  By Stephen Nellis

(Reuters) - Apple Inc <AAPL.O> is expanding a new physical store format as it tries to get iPhone 12 models into customers' hands, its retail chief told Reuters in an interview.

The new "Express" stores come as COVID-19 rates are rising around the United States and Europe. The new format has a wall built in front of the main store with sales counters protected by plexiglass and a few shelves of accessories such as phone cases and AirPods. Customers make an appointment to pick up orders placed online or interact with Apple's technicians for customer service.

For Apple, which has 271 retail stores in the United States, the new format could help it navigate a holiday sales challenge.

The company is launching its biggest-selling product of the year as the pandemic flares up again in key markets such as the United States and Europe. The company has taken a cautious approach to re-opening its retail stores, using a team that includes medical experts to make its own calls on a county-by-county basis and sometimes shuttering stores again when local rules would otherwise allow stores to operate.

The new "Express" stores give Apple another option in areas where troubling COVID-19 rates might force it to consider reducing service to curbside pickup.

That option does not work as smoothly for Apple stores in shopping malls or busy downtown shopping districts where the "curb" may be far away from the storefront, said Deirdre O'Brien, senior vice president of retail and people at Apple.

Apple currently has about 20 such stores in the United States and Europe and plans to expand to 50 across the two regions by the end of the month, she told Reuters.

Customers distance before entering an Apple Store during phase one of reopening after the COVID-19 lockdown in New York City, New York, U.S. June 17, 2020. REUTERS/Brendan McDermid

"It's a swifter way for us to serve customers," O'Brien said. "It allows us to maintain all the appropriate social distancing and maintain all of our health protocols within our stores."

Apple's iPhones are arriving a month later than usual because of pandemic-related development delays. Carolina Milanesi, an analyst with Creative Strategies, said customers who buy iPhones on Friday are unlikely to be put off by not being able to handle demo devices at the "Express" stores.

"People who are buying this early in the cycle, they know what they are buying,” she said.

Gene Munster, a longtime Apple analyst who is now a partner at Loup Ventures, said Apple will likely face about 5% fewer iPhone sales because of the retail environment for this year's iPhone launch. And Apple will lose customers who spend more than they planned in physical stores on accessories like cases or headphones.

But that loss has been offset by Apple's customer service, which Munster said helped drive higher revenues in Apple's most recent quarter.

"When you’re a parent trying to do school from home or an employer trying to do distributed technology, that’s a positive force," he said.

"That far outweighs the negative of what is going on in their retail stores, and we see that in their numbers.”

(Reporting by Stephen Nellis in San Francisco; Editing by Stephen Coates)

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