Is it better to have an Apple store in your mall which doesn’t share revenue or not have them at all?
This seems to be the important question the MTA had to contend with in the months leading up to Apple becoming the winning bidder for a prime location in Grand Central Station.
Apple under Steve Jobs and Tim Cook, the company had a reputation for being great negotiators. And this won’t change after the details of Apple’s Grand Central Station store in New York emerge. An audit says the MTA gave the maker of iPhones a sweet deal in exchange for a $5M cash infusion and competitive bidders had only 30 days to meet or exceed this “sweetener.”
Auditors claim the process was slanted towards Apple. And perhaps this makes sense as anyone who has visited the terminal knows the store attracts large amounts of people who not only are traveling by train but it seems to suck in tourists and others passing by.
In addition to the $5M Apple paid the MTA, they also paid the restaurant Metrazur $2M to vacate the premises. In the tri-state area we describe these moves as “an off you can’t refuse.”
“This audit is not fact-based, and, accordingly, their opinion is worthless,” MTA Chairman and CEO Joseph Lhota said in a statement.
Other critics say that Apple is alone among the 100 or so retailers in the station in not sharing in its sales and this will cost the MTA tens of millions of dollars in annual revenue. The MTA has countered the extra people the Apple store will lure to Grand Central Station will make up for the revenue loss of this deal.
This brings us to the point I made recently about Apple in retail… The company not only has a killer model but “malls” and municipalities need Apple stores and are willing to make concessions Microsoft, Google won’t get.
What I said specifically was:
The circular nightmare for Apple competitors? If you compete with Apple and don’t have a profitable retail strategy then you can’t compete with Apple.
This news shows competing with Apple is very difficult and unless you can make products which fill bodies in retail stores and get similar concessions, you are going to have a real tough time fighting against Cupertino.