Apple Inc. (Photo credit: marcopako )
New York Times :
Apple now has 363 stores worldwide.
Collectively, these stores generate a staggering US$18-billion of revenue per year.
Apple’s stores also generate an astounding 26% profit margin, allowing the company to rake in US$4.4-billion of retailing operating profit a year.
Apple now employs a vast number of store employees — more than 42,200 worldwide and 30,000 in the U.S. alone.
These employees work for a hip, cool company that makes them feel good about their work. But they don’t get paid much.
The average store employee helps generate about $420,000 of annual sales for Apple each year but takes home only about $25,000. The disparity between what Apple makes from its stores and the amount it pays its store employees is unmatched in the retail world. But it’s reflective of a larger problem in the economy. Many of the jobs we create are “McJobs” that don’t pay enough to live on and have little upward mobility.
Last year, during his best three-month stretch, Jordan Golson sold about $750,000 worth of computers and gadgets at the Apple Store in Salem, N.H. It was a performance that might have called for a bottle of Champagne — if that were a luxury Mr. Golson could have afforded.
“I was earning $11.25 an hour,” he said. “Part of me was thinking, ‘This is great. I’m an Apple fan, the store is doing really well.’ But when you look at the amount of money the company is making and then you look at your paycheck, it’s kind of tough.”
America’s love affair with the smartphone has helped create tens of thousands of jobs at places like Best Buy and Verizon Wireless and will this year pump billions into the economy.
Within this world, the Apple Store is the undisputed king, a retail phenomenon renowned for impeccable design, deft service and spectacular revenues. Last year, the company’s 327 global stores took in more money per square foot than any other United States retailer — wireless or otherwise — and almost double that of Tiffany, which was No. 2 on the list, according to the research firm RetailSails.
Worldwide, its stores sold $16 billion in merchandise.
But most of Apple’s employees enjoyed little of that wealth. While consumers tend to think of Apple’s headquarters in Cupertino, Calif., as the company’s heart and soul, a majority of its workers in the United States are not engineers or executives with hefty salaries and bonuses but rather hourly wage earners selling iPhones and MacBooks.
About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year. They work inside the world’s fastest growing industry, for the most valuable company, run by one of the country’s most richly compensated chief executives, Tim Cook. Last year, he received stock grants, which vest over a 10-year period, that at today’s share price would be worth more than $570 million.
And though Apple is unparalleled as a retailer, when it comes to its lowliest workers, the company is a reflection of the technology industry as a whole.
The Internet and advances in computing have created untold millionaires, but most of the jobs created by technology giants are service sector positions — sales employees and customer service representatives, repairmen and delivery drivers — that offer little of Silicon Valley’s riches or glamour.
Much of the debate about American unemployment has focused on why companies have moved factories overseas, but only 8 percent of the American work force is in manufacturing, according to the Bureau of Labor Statistics. Job growth has for decades been led by service-related work, and any recovery with real legs, labor experts say, will be powered and sustained by this segment of the economy.
And as the service sector has grown, the definition of a career has been reframed for millions of American workers.
“In the service sector, companies provide a little bit of training and hope their employees leave after a few years,” says Arne L. Kalleberg, a professor of sociology at the University of North Carolina. “Especially now, given the number of college kids willing to work for low wages.”
By the standards of retailing, Apple offers above average pay — well above the minimum wage of $7.25 and better than the Gap, though slightly less than Lululemon, the yoga and athletic apparel chain, where sales staff earn about $12 an hour. The company also offers very good benefits for a retailer, including health care, 401(k) contributions and the chance to buy company stock, as well as Apple products, at a discount.
But Apple is not selling polo shirts or yoga pants. Divide revenue by total number of employees and you find that last year, each Apple store employee — that includes non-sales staff like technicians and people stocking shelves — brought in $473,000.
“These are sales rates for a consulting company,” said Horace Dediu, an analyst who blogged about the calculation on the site Asymco. Electronics and appliance stores typically post $206,000 in revenue per employee, according to the latest figures from the National Retail Federation.
Even Apple, it seems, has recently decided it needs to pay its workers more. Last week, four months after The New York Times first began inquiring about the wages of its store employees, the company started to inform some staff members that they would receive substantial raises. An Apple spokesman confirmed the raises but would not discuss their size, timing or impetus, nor who would earn them.
But Cory Moll, a salesman in the San Francisco flagship store and a vocal labor activist, said that on Tuesday he was given a raise of $2.82 an hour, to $17.31, an increase of 19.5 percent and a big jump compared with the 49-cent raise he was given last year.
“My manager called me into his office and said, ‘Apple wants to show that it cares about its workers, and show that it knows how much value you add to the company, by offering a bigger raise than in previous years,’ ” Mr. Moll recalled.
Though a significant increase, Mr. Moll’s new salary of about $36,000 puts him on the low side of the wage scale at the other large sellers of Apple products, AT&T and Verizon Wireless, both of which offer commissions to sales staff at their stores.
In other areas, Apple has been a leader. Stores in a variety of fields have adopted the company’s retail techniques, like the use of roving credit-card swipers to minimize checkout lines, as well as the petting-zoo layout that encourages customers to test-drive products.
But Apple’s success, it turns out, rests on a set of intangibles; foremost among them is a built-in fan base that ensures a steady supply of eager applicants and an employee culture that tries to turn every job into an exalted mission.
This is why Apple can do something unique in the annals of retailing: pay a modest hourly wage, and no commission, to employees who typically have college degrees and who at the highest performing levels can move as much as $3 million in goods a year.