In Depth

Apple’s Revving Up For Retail

Though it’s painful to contemplate, summer’s waning days are upon us all. The days are starting to get a little shorter, children are just starting to think about starting their summer reading assignments and it won’t be long before kids go back to school.

And that can only mean, that shopping, en masse, is coming, as back to school and <gasp> holiday shopping is now right around the corner. And the retailers are already revving their engines.

If you’re Apple, that dull whirl is just starting to become audible. Apple had a successful second quarter, but not one that was quite successful enough to inspire a burst of investor confidence — particularly with concerned speculation as to whether or not the Apple Watch will go down in history as Tim Cook’s first flop at the helm. There are also questions as to whether Apple’s much ballyhooed mobile payment system is getting any kind of traction, or is just sort of sitting as a peripheral feature appealing to niche users.

We’ll have more on that next week after PYMNTS’ tribute to all things retail at R2, when the latest edition of the PYMNTS/InfoScout Apple Pay use numbers go live. If you find you need to whet your whistle before then, you can check out our quick back-of-the-envelope calculations last week factoring in a few tidbits we learned about iPhone 6 usership in the U.S. during Apple’s earnings call last week.

But while we wait for the latest hot off the press numbers, it’s worth checking in with how Apple’s retail efforts are spinning to life as the summer season ends and the spending season ramps up.

Playing Nicely With Others

Earlier this week it broke that a month after the Apple Watch went up for sale in Apple stores nationwide, it will be making the jump into another location.

Best Buy, to be specific (and only in limited locations). The Apple Watch will start out in about 100 Best Buy locations and will expand to 200 by Christmas. Shoppers will also face some limits in what they can get, though not limits likely to bother most customers. The sport and stainless steel versions of the watch will be available at Best Buy. Customers looking for the gold plated version that starts at $10,000 will have to look elsewhere. Though physical locations will be limited, the watch will be for sale online at the Best Buy website.

“The Apple Watch is an important addition to an emerging product category, and we know our customers want it,” said Jason Bonfig, senior category officer at Best Buy. “We are excited to bring Apple Watch to more consumers, especially with the holidays coming up.”

And Best Buy isn’t the only one Apple is playing with. Though the partnership with Best Buy aims to make the watch an accessible electronic, Apple is also positioning the watch as a luxury fashion item at a handful of high-end boutiques and department stores including Colette in Paris, Dover Street Market in London and Tokyo, and Selfridges in London.

And while some have noted that Apple’s decision to compete with its own retail locations on its new product is somewhat out of step with freshman SVP of retail Angela Ahrendts, it does bear remembering that in this instance Apple can stand the competition because…

Apple Retail Is The Most Profitable Retailer (By Square Foot)

Earlier this year, it was reported that Apple had not only again taken the crown as the most profitable retailer by square foot, but they had actually managed to extend its lead.

In 2014 Apple brought in $4,800 in sales for every square foot of retail space it operates, edging No. 2, Tiffany and Co’s $3,132 by over $1,500 per square foot. Diamonds may be a girl’s best friend, but as it turns out, Apple is best friends with everyone.

Particularly since the launch of the iPhone 6.

Though Apple led the pack dramatically last year, this year’s result represents 5.5 percent increase over 2013, whereas Tiffany (also last year’s runner-up) only saw its sales per square foot increase 3 percent.

Other brands in the Top 5 beaten out by Apple were Michael Kors and Lulumelon Athletica.

Growing Apple Pay (And Pushing More Omnichannel?)

While the news of Apple’s Pay’s launch in the U.K. got much of the attention out of its June WWDC event, Apple also noted that its burgeoning payment platform was also starting to tie in with private label (store branded) credit cards.

That expansion is limited — so far to Kohl’s, JC Penney’s and BJ’s Wholesale Club — but the firm has stated that this marks a beginning as Apple looks to expand more fully into storing and integrating with private label cards. That integration is intended to give users more flexibility.

For example, Kohl’s card carriers can tie their Apple Pay accounts (and card account through it) to Kohl’s Yes2You Rewards program. That program allows users to choose to use Apple Pay to use the card, or the user’s stored rewards points to make a transaction.

The Coming Competition

Apple also faces its major retailer-backed competition emerging this fall; earlier this week CurrentC, after months of hiding, came out to announce its impending launch.

Three years ago the Merchant Customer Exchange founded the mobile payment technology referred to as CurrentC — a technology that was created by major retailers Walmart, Target and Best Buy — to enable consumers to pay using their smartphones.

It’s been a bit of a wait since then – albeit an exciting one.

Now that the tech has made its way through its initial testing, it’s moving on to a limited trial run as soon as next month, Bloomberg reported.

CurrentC got some mixed press when Apple Pay went live, and the otherwise quiet firm quietly and firmly told their contractual partners to unplug Apple Pay terminals, or face being booted from the CurrentC family.

Bloomberg was also able to confirm the public test launch date with Scott Rankin, MCX’s chief operating officer, who said MCX was “making good progress” on helping the CurrentC app get to the market.

“We expect there to be more than one successful player in mobile payments, and we expect to be one of them,” Rankin said.

So should CurrentC — with all those retailers behind it (retailers that by contract Apple cannot get access to) — be of concern to Apple, with its limited merchant support?

“I doubt it.”

Thus was Karen Webster’s verdict on CurrentC when the news broke earlier this week. The merchant network might have a shot at survival, with the right robust partnership. Without it? Not so much.

“A CurrentC network launched as an independent solo network is DOA. DOA from the consumer’s standpoint and DOA from the merchant’s standpoint. (The same is true if they don’t really have a very committed partner, so also watch for a lame partnership announcement.),” Webster wrote.

So Apple may have its issues in retail — such as getting people to buy the watch, or finding the right use cases for Apple Pay.

But CurrentC probably won’t be one of those issues, at least not without a little help from a very big friend.



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