Apple Stores Make Tidy Profits, but They Don't Need To
Nov 15, 2012 5:00 AM PT
As the news hits that -- yet again -- Apple retail stores produce far more sales per square foot than any other retailer, including Tiffany's, the piece I most often see missing is the most important: Apple's retail sales success is a side effect, not the goal. When Apple fired the recently-hired John Browett as senior vice president of retail sales, CEO Tim Cook proved he's willing to do what it takes to make sure that everyone knows exactly what's most important at Apple -- and it's not profitability.
Actually, it's not the customer, either.
Is it Apple then? No, I don't think so. Steve Jobs certainly wanted Apple to succeed, but of everything I've seen out of Apple over the years, something else is held aloft far above us all: The product.
The iPhone, iPad, iPod, MacBook Pro, MacBook Air, Apple TV. All of these things are about themselves, first and foremost.
In a retail environment, Apple's stores have a lot of glass so you can peer inside and see the pretty products. Better yet, you can walk inside and touch them, use them, learn about them. The displays are like pedestals upon which a bounty is offered to the gods. The stone tiles beneath your feet that lead to the products were mined and shipped from special places. There is no glass that bars you from touching the real thing. There is no fake plastic shell with a photo illustration of the screen. The iPads are not models, they are functioning units.
Nothing can get in the way of the product.
It makes sense for a company that designs the insides of its products for beauty in addition to functionality. Manage Against Profitability? The Horror! After Ron Johnson left to recreate J.C. Penney, a.k.a. JCP, Browett was tapped to lead Apple's retail juggernaut. Browett's biggest sin, aside from possibly not fitting into Apple's culture, was that he was managing Apple Retail Stores to return greater profitability. What's better than beating Tiffany's at square-foot-sales? Making more money. To do it, he was reportedly cutting back on staff and limiting overtime. He was making Apple Retail Stores lean, mean, and profitable.
There's a bit more craziness to this picture, though. It's not necessarily all Browett's fault. According to a report on ifoAppleStore.com -- which focuses entirely on Apple's retail stores -- while Steve Jobs was sick, Tim Cook and CFO Peter Oppenheimer began pushing Johnson to make the retail stores more profitable. After all, Cook was Apple's operational genius and Oppenheimer was, and is, the numbers man.
However, something happened, clearly, when Browett was given the walking papers. The dark side is that maybe he just wasn't as good as Cook when it comes to operations, but I'm hoping that Cook had an epiphany and realized that the Apple retail store experience is not about profitability, that it's not about being lean and mean, and that it's not about ushering customers in and out. It's about showcasing the product, and when the customer service falters, the customer can't revel in the products.
All the profit that has come from the Apple Retail Store -- the reasons why Apple has doubled the per-square-foot of Tiffany's -- has to do with what Jony Ive has created. The product.
If you're an Apple fan, ask yourself this: How often, as you're out and about, maybe traveling to a new city, do you walk past an Apple Retail Store without going in?
I go into them all the time, even searching them out with my beleaguered Maps app on my iPhone 5, just to see all the Apple products that I don't already own -- even if nothing new has been announced.
I do not go in to talk to Geniuses. I do not look for a greeter in a special shirt to make me feel important. It's not about the service. The service is what enables the product experience. I'm pretty sure that quite a few Apple fans enter these places just to look -- again -- at the 27-inch iMacs, to pick up the MacBook Air and wonder if the next time they buy a MacBook if it will be the time to ditch the MacBook Pro and go light with a MacBook Air. Or, hmm, maybe pair an iPad with a 27-inch iMac.
How many times have you walked into an Apple retail store to touch and feel a product, to consider it, and it was only later, maybe weeks, that you actually bought something -- online? So where did that sale come from: the retail environment or the online channel? A 360-degree video of an iPad is cool and all, but Retina displays? Better seen in person.
In fact, I believe that the customer experience is often less about the exact operational rules than it is about the feeling and mood of each and every store, which is in a large part based on the feelings and mood of each employee in that store, right down to their posture, facial expressions, bounce of step, and tone of voice. In a toxic environment, all that oozes into the air and it blurs your customer vision and experience with the product.
I hope that Apple's next senior vice president of the retail channel understands all this -- and that Cook feels it in his bones, too. If the next retail leader doesn't get it, our Apple retail stores will begin to resemble the jungle ruins of some ancient and forgotten temple -- despite all the shiny products propped up before us.