Brushed steel, glass stairs, oak tables – the latest Apple retail store in London's Covent Garden has everything you'd expect from the company. Due to open on Saturday, it will be Apple's 300th store and its biggest yet, but the high-profile opening is also a welcome distraction from the recent launch of its misfiring iPhone 4.

While Apple promised the new store would stock more iPhones than any shop in the world, it would not say whether the elusive white version would be available, which is widely expected to be released later this year with an improved antenna to cure the much-publicised fault, in which the devices lose their signal if held in a certain way.

Apple cannot afford any more setbacks in the competitive smartphone space where, according to Nielsen, Google's Android phones have been steadily gaining market share and account for 27% of the market. Before the launch of the iPhone 4, Apple had a 23% share, Nielsen found.

Senior Screen Digest analyst Dan Cryan said that trouble was brewing for Apple in the smartphone market, where Google is aggressively pushing its Android operating system for mobiles and tablet devices.

"The future is not without its challenges for Apple," he said. "The rise of Android is set to pose a challenge to both the iPad and iPhone lines and Apple has yet to sink its teeth into the 'cloud'. There is scope for improvement."

Apple's retail strategy relies on filling its chic, spacious stores with attractive devices. The first retail outlet opened 10 years ago in Virginia, and Apple now has stores from China to Switzerland, from the iconic glass cube on New York's Fifth Avenue to the Louvre in Paris. Later this summer, new shops will open in Chicago, Paris and Shanghai, the latter featuring the largest pieces of curved glass ever manufactured.

Each store is overseen by Ron Johnson, Apple's senior vice-president for retail. He said it would have more space for children, training, small business services and kit in stock than any of its other stores in the world.

Apart from two small outlets in Westfield and Brent Cross, the often chaotic and crowded Regent Street store has served central London until now.

Retail analysts Verdict estimate that despite the spacious layout the Regent Street shop has the highest sales density of any retailer in London, generating an average £2,000 per square foot. Consumer electronics firm Dixons generates £536 and TopShop's flagship store at Oxford Circus £1,000.

"For most people, what they call flagship stores, it's just for the brand and doesn't make money," said Johnson. "It was a big bet to come to Regent Street and open a store like that, and it worked."

Verdict's consulting director, Neil Saunders, said the combination of higher-end products, avoiding third-party dealerships and choosing high footfall locations had been key to Apple's retail success.

"It has a brand people are evangelical about," he said. "Apple is a better retailer than most because it understands brand management, that retail is about selling aspirations and dreams and not just lumping products on a shelf."

Not for the first time, Apple defied the analysts who predicted its retail strategy would fail because it went against the prevailing market trend. After 10 years, arch-rival Microsoft has just four retail stores in the US, while Apple has 28 in the UK alone. Retail accounted for 16.4% of Apple's revenue in the second quarter of 2010, up 78% from the previous year to $2.58bn.

Johnson's interpretation of the Covent Garden project was to create a big, spacious retail space to embody the Apple brand. But without great products Apple has no retail strategy, so Johnson had better hope Apple can continue to keep its edge.



• This article was amended on 6 August 2010. It originally stated that the "glass cube" Apple Store was on Wall Street; this has been corrected.