It’s hard to deny the incredible success of Apple Stores.  In just a over a decade since the first store was launched in May at Tyson’s Corner, VA they’ve grown to 245 locations in the US and 358 across the globe.  Fortune magazine in 2007 named Apple “America’s best retailer” and rightfully so.  According to RetailSails’ research this year, Apple Stores generated over $14 billion in sales for the trailing four quarters.  That means that for the 327 stores at the time of this study generated $5,626 per sq ft of floor space, beating out the second highest Tiffany & Co. with $2,974 per sq ft!  

So, you're thinking the equation is: Apple Products + Fanatical Customers = Success.  Not so fast, let's take a closer look...

Apple wasn’t doing well in the traditional big box electronics stores in the late 90‘s.  And so, in 1999 Apple hired Allen Moyer, a former Sony exec who had worked on the company’s retail development projects.  One such project he worked on was the Metreon complex in downtown San Francisco.  There Sony had opened its own Sony Style store where consumers could try out the latest Sony products.  It was in the middle of a densely populated, destination city by design - for upscale traffic, lots of it.  

This was the genesis of the big idea.  Then along came Ron Johnson, who left Target for Apple in 2000, reporting directly to Steve Jobs.  Johnson is credited with most of the strategy and the brilliant execution from there on out.  In fact, the first store was designed in a rented warehouse as a prototype - Apple Store version 0.1 if you will.

According to the 2007 Fortune magazine article accompanying the ‘best retailer’ listing, Jobs discovered, during this process, that the layout of the store was by their traditional product categories instead of how the customer might actually want to buy things to accomplish specific tasks like photography, video, music, information, etc.  And since this was just a mock up they were able to redesign the store layout and get the layout right when they went “live”.

Another very key element of the Apple Store strategy was the Genius Bar, which for the first few years wasn’t all that used by the customer.  But, this innovation which is in great demand today, came out of a focus group panel that brought a variety of people together from all walks of life where they were asked what their best service experience was.  16 of the 18 focus group panelists mentioned a hotel example.  So they asked the question “Well, how do we created a store that has the friendliness of a Four Season Hotel?”  Their answer was: “Let’s put a bar in our stores.  But instead of dispensing alcohol, we dispense advice.”

In Ron Johnson’s (he’s announced that he will be joining J.C. Penny as CEO) blog on the HBR Blog network he states clearly why all this effort paid off so richly for Apple, saying:

“Any store has to provide products people want to buy.  That’s a given.  But if Apple products were the key to the Stores’ success, how do you explain the fact that people flock to the stores to buy Apple products when Wal-Mart, Best-Buy and Target carry most of them, often discounted in various ways, and Amazon carries them all - and doesn’t charge sales tax!  People come to the Apple Store for the experience - and they’re will to pay a premium for that.”

There it is - The Experience

Johnson goes on to pose a quite profound, obvious yet often missed question, “How do we reinvent the store to enrich our customers’ lives?” 

What would your company do if you really started asking this question for your customers?  Apple took an old bricks and mortar vehicle and reinvented it by asking and and answering this question.  They weren’t focused on the revenue and profits, they were focused on creating a superior customer experience.  The revenue and profits will follow.  It doesn’t take a genius to figure this out - but it just may take a Genius Bar!  So what’s your “genius bar” experience that you need to deliver for a superior experience?

Oh, by the way, often when you’re pursuing your own “genius bar” experience you’ll run into the “experts” who will predict your sure failure.  Retail consultant David Goldstein did just this when he confidently stated in 2001:

"I give [Apple] two years before they're turning out the lights on a very painful and expensive mistake."

Keep your eyes on the customer they’re the experts you want to listen to!

 


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    John Geffel

    Value is a much abused, misunderstood and misused word, everyone thinks they provide it but so few show real evidence that they do!
     

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