If you live in Silicon Valley.... it seems like you are never more than 6 degrees from Apple. They are always wielding their vast power and technological influence. If you work in tech at all - you will eventually cross paths with Apple. They were one of my first tech jobs. I've dated people who worked there. And now Mr. S's business is somewhat married to Apple. With the economy seeming so shaky - I had to find out why Apple still seemed like a bright spot.
I'll admit, I've shied away from Apple products. I worked there when the products were having a hard time. And now that they are "trendy", my motivation to own Apple products is pretty weak. But, with all the computer companies slashing earnings - I found myself captivated by how Apple could still be opening stores. After all - I've been to a Sony Viao store, and it wasn't that great. Plus, all sorts of smart people are saying this is going to be the worst depression since the 30's. Since I've called bullshit on that, I have to keep making sure I'm not wrong. When I see the layoffs, I have to admit my confidence becomes really shaky.
Normally I would have gone to the snooty rich district to see if wealthy people were still spending money. I've come to call this place Hollywood 2. Big Mansion-ey houses, Ferrari's, and Bentley's. And recently, a ton of plastic surgeons have made H2 their playground. All they need is television people, and it would pretty much be the same. But, rich people are often insulated from bad times.
I'd read that a new Apple store was opening in the Central Valley. Methdesto. Look it up in the Urban Dictionary. They are one of the most depressed housing markets in California. I couldn't figure out why Apple was opening a store there. Mr S. couldn't figure it out either - but we agreed to go check out this new store. To see how such a disadvantaged area could sustain a high end computer store.
Before starting out - we stopped off at the chiropractor. Methdesto used to be the only place he could afford to live. In California, you can never live and work in the same town. You just can't afford it. And we wanted to know if there was a breakfast restaurant out there worth going to. Even he thought it was pretty funny they were opening an Apple store there. He gave us his recommendation and off we went.
After driving about an hour we arrived at the mall where the store was opening. Apple is oddly vague about were their store locations are. So we parked and planned on walking the mall to find the place. After stopping a mall postman, we were pointed in the right direction. The store was outside the mall.
The latest trend here has been high end stores opening up in buildings right next to the mall. They are like high end store additions to the mall. But, these are typically new buildings. And as it turns out this where most of the business for malls is being attracted. I've noticed in my city for example, the mall is mostly empty, but these new places are packed. The malls themselves are usually old buildings and minimally updated. For instance all the "up" escalators in the Methdesto mall were broken, and it seemed pretty depressing inside. But, these new additions had sprung up. That area was thriving and packed. The new Apple store was completely packed. You could hardly walk down the isles. I would have gotten a picture, but I'd asked one of the Apple guys if they would freak about me taking pictures inside. He told me they would - so I opted to take pictures from outside. Apple gets bitchy that way.
Much to my surprise. The Coach store was also packed. Coach is the Intel of fashion. They are bell weather companies. Seeing all these people in high end stores in a agricultural area hard hit by the mortgage crisis was fascinating. It took me completely by surprise.
I had prepared myself to come away feeling depressed. Yet, I was feeling optimistic. It didn't make sense to me how the markets were pointing to a very different picture. Then Mr S. said this to me. "It seems like business sentiment is really the problem. Obviously consumer sentiment seems okay". And he was right. Businesses are preparing for the worst, because they don't know what is going to happen. People are willing to buy stuff if you just give them something new and interesting to buy. But businesses don't know what is going to happen next year, and how the rules are going to change.
The consumers appetite has shifted, and those stores that make up the malls are stale and outdated. Watch the companies who make up the periphery of the mall. Those are the new companies to watch to look at market health.
so what was the consensus on why an apple store would open in methedso?
ReplyDeleteI'm not sure I was there long enough to give an answer. Only my observations. The demo seemed more highly educated than I expected. Less hardened sun weathered skin. All those farmers must be sending their kids to school for better lives. 90% of the cars in the mall parking lot were 10 years old or less. And there were many more Mercedes than I expected. Health care seemed to be a big employer. In the middle of nothing but almond orchards was a ginormous 10 story Kaiser Permanente campus. I would have taken a picture, because it was so out of place. But, the air quality was shockingly horrible that day.
ReplyDeleteI was perplexed as to where the jobs were coming from. These people seemed to have money. Even despite plunging housing prices. People used to commute to the bigger tech areas when methdesto was the only place they could afford, but you can move much closer to the jobs these days.
Also interesting was the knockoff outlet stores were pretty empty. Every time I've been through this area the outlet malls are packed. But, not that day. Yet higher end Coach stores seemed to be attracting people.
I don't know what to make of it. But it was exactly opposite of what I expected.
I don't know that Coach is much of a bellwether. Upscale brands, especially "affordable luxury" ones like Coach, tend to attract three groups: longtime loyalists, insecure people with money (they can't judge for themselves, so flock to name brands), and splurgers/strivers.
ReplyDeleteWe are a long way from the bottom in the collapsing real estate market. Citigroup is handing out pink slips to 50,000 people. And my guess is that the "bailout" of GM will end up being a kind of merger/bankruptcy, shedding at least two of GM nameplates (Olds and Pontiac) and swallowing Chrysler (ending Chrysler and Dodge as brands in hopes of keeping Jeep on life support).
Those are going to resonate far and wide.