Apple's Next Growth Market


During the Goldman Sachs Technology and Internet Conference on Tuesday, Apple CEO Tim Cook announced the company's intention to expand its retail footprint. Currently, Apple operates over 400 retail stores in 12 countries, which served 120 million customers last quarter. Apple places a high emphasis on its retail operations, acting as the "face" of Apple, which not only builds a sense of community, but also acts as a way to educate customers about its products. These stores have been paying healthy dividends for Apple, which averaged $50 million in annual revenue per store last year.

It should come as no surprise then that Apple announced plans to open its first retail store in Turkey, bringing Apple's retail presence to 13 countries. From a demographic standpoint, Turkey makes a whole lot of sense for Apple. The average household in Istanbul, for example, spent over $43,000 on consumer expenditures in 2010 and had over $8,400 in disposable income. This compares favorably to Chinese urban areas where the average household disposable income was $3,000 per capita in 2010. Considering over 18% of Turkey's 73-plus million people live within the city limits of Istanbul, it has high growth potential for Apple.

Bigger picture
The more mind share Apple can create in Turkey with its products, perhaps the better chances it has of securing that $4.5 billion contract for supplying up to 15 million iPads for educational use. Opening a store in Turkey would allow the people to get the full Apple experience, and it could be the first step toward influencing education sales in underserved markets. Ultimately, education has the potential to outgrow the consumer tablet market. With iTunes U, educators have a robust technological platform that students can leverage on their school-issued iPad or computer.

This is just the beginning
Apple may be smarter than investors give it credit for. The company does its homework in determining which retail markets it will enter, focused primarily around high saturations of wealth. During the keynote at Goldman Sachs, Tim Cook highlighted the importance of expanding its international retail presence. Apple has plans to open an additional 30 stores, which will be "disproportionally" outside of the U.S. With Turkey being Apple's 13th market, Tim Cook believes there's still plenty of opportunity for Apple to expand internationally. In the future, a lot of emphasis will continue to be placed on retail, ultimately driving further understanding (and hopefully sales) of its products.

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