With 10 million iPhone 6 units sold last weekend just after release, Apple's (NASDAQ:AAPL) new phone is a formidable presence in the market. However, its influence in sales might be stepping on investors' toes.
Retailers battling for shopper discretionary spending during the buildup to the holiday season are in for for a letdown. Wells Fargo estimates that U.S. consumers will spend approximately $14 billion on their new iPhones, reported The Wallstreet Journal, starting with last weekend's launch and lasting until year-end.
But according to the report, that figure equals almost two-thirds of the United States' year-over-year retail growth during the last holiday season, meaning that the industry's discretionary dollar has almost fully been allocated to Apple's pocketbook.
The many millions of shoppers flocking to get the year's latest new gadget portend that much less will be spent on apparel, clothing, traditional toys and home furnishings, among other things.
So for companies who aren't banking on the buck that the iPhone is bringing in, including hard-pressed retailers like Aeropostale, American Eagle Outfitters, Abercrombie & Fitch, and even luxury labels such as Coach and Michael Kors, the situation does not bode well.
But it doesn't stop there. The Apple Watch is yet to come, and that is sure to attract consumers' attention, so if that golden discretionary dollar is still dangling, it's sure to be sucked right back into Apple's pockets with the impending release of their latest innovation.
Wells Fargo estimates that Apple will sell 6 million watches in the first year after its launch, and with each unit going for $349 a pop, that's going to chip a $2 million block off of the collective consumer spending budget. DigiTimes reported that notebook computer sales have also seen a turn for the worse as Chinese consumers hold off on purchasing in anticipation of Apple's new iPhones.
As vendors brace themselves for a continuation of Apple's virtual monopoly into the fourth quarter, many have significantly reduced orders from manufacturers to avoid inventory buildup.
But the situation isn't so gloomy for everyone. Companies that benefit from Apple products, such as Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT) and RadioShack (NYSE:RSH), will definitely benefit.
Radioshack is in special need of resuscitation. The tech retailer initiated talks with shareholder Standard General in late August to secure a rescue financing package as it vied to stave off bankruptcy. If the demand for the newest Apple products continues at the going rate, the retailer could stand to see another day.
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