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Apple Essay

7904 words - 32 pages

APPLE INC IN RETAILING (WORLD)

June 2014

SCOPE OF THE REPORT
Scope

All values expressed in this report are in US dollar terms, using a fixed exchange rate (2013).
2013 figures are based on part-year estimates.
All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data are expressed in current terms; inflationary effects are taken into account.

Retailing

Disclaimer
Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors.
Figures in tables and ...view middle of the document...

The company plans to open
30 new stores in 2014, with two thirds of them outside the US.

involvement: Global
Electronics and

Apple achieved 17% growth in 2013; while this appears impressive, it actually achieved a 24% CAGR over 2008-2013; managerial

Category
involvement:

World
retailing value share 2013: World
retailing value growth 2012-
2013:

appliance specialist
retailers, internet retailing

0.3%

17.0%

upheaval in the wake of the death of charismatic company founder and CEO Steve Jobs at the end of 2011 was a factor in this dip.
Growth is driven by a mixture of relentless product innovation, hard retail control and a level of premium brand equity beyond its competitors‟ reach. This strategy allows Apple to hold high price positions with no compromise, and the premium status of the brand is reflected in its stores; all located in desirable high-traffic locations.
As a result, Apple significantly outperformed the global retail market in 2013. Many of the mature markets where Apple is strongest were characterised by extreme price pressure, but the company‟s rigorous control of how its products are sold has allowed it to sidestep this.
Apple consumers tend to be price-insensitive, and as a result there is little pressure for the company to push into emerging markets, where its sales model might be difficult to operate anyway. North America and Western Europe generated 84% of 2013 sales - nonetheless, it is seeking to build outside these regions, especially in China.

Apple saw sales growth of 355% between 2008 and 2013, driven by a stream of new products and the company‟s cast-iron consumer loyalty.
However, sales growth slowed in 2013. A
comparative lack of product development in FY
2013, as well as stronger competition from other smartphone brands such as Samsung were probably more important, however.
Net sales (US$ billion)
Profits were hit by rising costs, including a 32% increase in R&D and US$499 million for new retail stores. Apple opened 26 retail sites in FY 2013. This helped boost reported retail sales from US$18.8 billion to US$20.2 billion.
However, the company is still in very good health, and holds vast cash reserves. Profits for 2014 are likely to be hit by further investment in stores, but Apple plans to roll out new product categories in
2014, which may include the long-rumoured iWatch and iTV. These products should help recover margins and continue to drive growth over the forecast period.

180

160

140

120

100

80

60

40

20

0

Apple Inc: Net Sales and Net Income
2008-2013
45

40

35

Net income (US$ billion)
30

25

20

15

10

5

-
2008 2009 2010 2011 2012 2013

Net Sales Net Income

Source: 2013 company annual report

Apple Inc: Net Sales and Net Income Q2
2013 vs Q2 2014
46 10.4

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46 10.2

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