The Secret to the Success of Apple’s Retail Stores

Credit Apple

Credit Apple

 

By Benjamin Rudolph

“Apple Stores are doomed before they open.” “Retail will bankrupt Apple again.” These are just a few of the headlines Apple faced prior to opening its first store in Tyson’s Corner Mall in McLean, Virginia in May of 2001. But times have changed and Apple continues to open stores with a perfectionist level of attention on aesthetics and the customer experience. So, what is the history of Apple retail, what can other retailers learn from Apple’s approach, and, how did the now famous “glass cube” stores become the face of Apple?

1. A look back at history. Apple’s first two stores opened in Tyson’s Corner Mall in McLean, Virginia, and in the Glendale Galleria in Southern California over 20 years ago in 2001, hosting over 8,000 visitors combined in their first two days. To prepare for their grand openings, Apple built a complete mock-up of an entire Apple store in a warehouse near its campus in Cupertino to test floor layouts.

Retail locations represented a huge gamble for Apple at the time, especially for a company that had been on the precipice of financial ruin, only a few years before it went into retail. Success of the Apple store was not guaranteed. Many people may not realize that the stores experienced some speed bumps along the way. For example, the now iconic (and difficult to get a reservation for) Genius Bar flopped during the first year. Customers were accustomed to dealing with service requests over the phone and were uncomfortable airing their lack of technical know-how in public. Apple even experimented with having Evian water in a refrigerator near the Genius Bar to entice customer to sit and spend time with the “Geniuses”. Now, Apple operates over 500 stores, employs over 65,000 retail employees, and delivers a higher sales per square foot than even Tiffany & Co.

2. The power of controlling your customer’s journey. In the 1990s, Apple sold its products through Sears and CompUSA. Apple products were nearly invisible, buried amongst other products sold by its retail partners, compromising the Apple brand. During that time period Apple’s share in the PC market collapsed and three CEOs were fired. Then Steve Jobs returned to the company he founded and created one of the greatest turnarounds in corporate history. One of the key drivers of Apple’s turnaround was a move to vertical integration. This shift paired with the release of several Apple products marked one of the greatest stretches of consumer electronic device releases ever. Apple’s retail stores are also one of the key drivers that catapulted the brand into the most valuable brand in the world. The moral of the story is: having greater control of your brand’s customer experience can have a profound impact. Apple was able to do this when it launched its retail stores. You are the architect of your product and your voice is most powerful when telling potential customers the story of why your product and your brand will enrich their lives.

3. Focus on the customer experience, not sales. “I’m not even sure ‘store’ is the right word anymore,” said Tim Cook. He may be right, as Apple refers to some of its stores as “town squares” and “gathering places”. People do not buy products; they buy your brand. Your products and the experience you provide are an extension of your brand.

It is a little-known secret that Apple scrapped its original layout of its stores a mere week before the Apple store was originally planned to launch. Ron Johnson, SVP of Retail Operations, at the time, told Jobs that “we've organized it like a retail store around products, but if Apple's going to organize around activities like music and movies, well, the store should be organized around music and movies and things you do.” Today Apple stores are places that encourage customers to explore what Apple products can do for them, rather than simply having product stock available for browsing. Even if you do not own an Apple product, Apple’s stores invite you in to tinker and explore. After all, have you ever seen an empty Apple Store?

4. Your brand is a valuable source of information. Apple’s former head of retail, and former Burberry CEO, Angela Ahrendts, took this “experiential” approach to new levels during her tenure. Since 2015, Apple has worked to open redesigned stores and update current ones with “next gen” features. These include boardrooms for entrepreneurs within the community to host meetings, large screens and stages called “forums” for local artists and movie showings, and the launch of Today at Apple. Today at Apple provides educational programing to demonstrate how to use Apple products for photography, coding, music mixing, and more.

Retailers and brands have amazing opportunities to create content that their customers crave. Apple executes this better than anyone with Today at Apple, using information not for marketing purposes, but as a way to arouse curiosity, empower creativity, and draw customers in. Authentic and engaging content that binds the customer to your brand works better than traditional marketing communications.

5. Sweat the small stuff. We have all heard the stories of Jobs’ famously detail-oriented personality, and Jobs extended this tendency into Apple Stores. Store openings were delayed when, for example, Jobs was unsatisfied with the screws used in glass staircases within the stores. This led Apple and its own in-house engineering team to create their own screws for the now iconic floating glass staircases we see in its stores around the world. Jobs’ name is on the patent. 

Jobs also insisted on modelling the Apple Store’s customer service approach after the Ritz Carlton’s service guidelines, having early store employees go through the Ritz’s training. He eventually developed Apple’s own service guidelines based on an acronym: A-P-P-L-E: approach, probe, present solution, listen, end with farewell.

While critics pointed out that this perfectionist attitude and Apple’s limited number of products would hurt store profitability, the iconic glass cubes and remodelling of historically significant buildings to accommodate Apple stores represent a brand beacon. What details in your industry are overlooked, and how can you use this “highest standard” to differentiate your store and your products?

Ahrendts summarizes the state of retail best, saying: “I don’t think malls are going to go away. People still need somewhere to go, but they do have to evolve.” Retailers can learn from Apple’s success by having more control over the customer journey, focusing on brand experiences rather than unit sales, creating authentic content, and paying attention to the details. At the end of the day though, every brand is different and there is no algorithm for retail success. Rather than asking “how do we copy the Apple Store”, retailers should ask “how do we reinvent the store to enrich our customers’ experiences?”

 
Tricia McKinnonStrategy & Growth1 Comment