Blog

How Apple’s iPhone affects retail spending overall

September 26, 2014

The iPhone 6 has a strong impact on retail spending figures. 

The impact that the iPhone 6 has on the market is far-reaching. Apple sold more than 10 million new iPhones last weekend, breaking previous sales records for any phone. Demand for the larger screen sizes – the 4.7-inch for the iPhone 6 and the 5.5-inch for the iPhone 6 Plus – contributed to strong sales of the devices following the product launch. The iPhone is responsible for approximately 60 percent of overall profits for Apple. Chief executive Tim Cook commented on the high demand for the phone.

“We could have sold many more iPhones with greater supply and we are working hard to fill orders as quickly as possible,” said Cook, according to MoneyMorning.com

Other retailers not thrilled about strong iPhone 6 sales
The new model is proving to be a success so far for Apple but other retailers are not as thrilled. Ultimately, retail spending in the U.S. comprises one large pool of money. If consumers spend approximately $14 billion on iPhones by the end of the year, then almost two-thirds of anticipated year-over-year growth in retail spending is taken away from other retailers, according to The Wall Street Journal. As Apple takes away a big share of consumer spending, a loss is experienced elsewhere by other companies. Ben Reitzes, analyst at Barclays, believes that the iPhones will continue to sell at record highs.

“Demand is clearly there for the phones – in the tens of millions right now – and significant demand will likely spill out of September into future months,” said Reitzes, according to MoneyMorning.com.

Retailers that are currently experiencing pressure in a competitive market, like American Eagle, Abercrombie & Fitch, Coach and Michael Kors will feel the pain more acutely. The upcoming release of the Apple Watch in Spring will only intensify matters. Wells Fargo forecasts that Apple will sell 6 million watches in the first year which would subtract another $2 billion from overall consumer spending figures, reported The Wall Street Journal.

Some retailers may benefit
Alternatively, not all retailers will experience a loss. Companies such as Amazon.com, Target and Wal-Mart that sell the new iPhones as well as older discounted models may benefit from the spark in interest. Accessories and complementary products may lead to more sales as well. In the coming months the power of the iPhone will be witnessed as retailers hurry to either compete with or sell the highly sought after devices.  

Back To Blog