updated 09:30 pm EST, Mon November 26, 2012
Shows focus on customer experience over profit
A previously-unaired internal Apple video from 2011 led by former SVP of Retail Ron Johnson and featuring rare appearances by Apple Store architects and VP of Retail Development Bob Bridger was posted to YouTube for a while on Monday (and has since been pulled). The video, about 10 minutes in length, showcases how Apple approaches creating both its in-mall and standalone Apple Stores -- revealing that Apple's customer-centric philosophy is not just for show, but a key element in its retail success.
Johnson and Bridger discuss the importance of getting the "feel" of the store right in various locales, respecting the local customs and culture (and using London's Covent Garden store as an example of this). But even with stores inside of malls and other spaces Apple rents rather than owns, a great deal of effort is expended on trying to make sure customers have a good experience. Half of the retail space, Johnson points out, is devoted to assisting existing customers (through service areas, Genius bars, class space and other activities). This choice makes the store seem to customers like a place where they can find help in accomplishing the goals they bought a computing device to achieve.
The approach appears to be very successful, and under Johnson's watch the chain became the most profitable per-square-foot retail chain the world, even surpassing high-margin jewelry and apparel chains. Retail imitators like Sony, Microsoft and in particular Samsung have tried to mimic the approach, but their implementation -- lightly-differentiated copies of the Apple Store with a more rigid consistency from one store to another -- has failed to resonate with the public, as recent surveys have shown.
The video (a mirror is embedded below, but is likely to be pulled at any time) highlights Apple's main differentiation from their competitors by way of the company's belief that investment in a first-class experience in both initial selling and follow-up care helps create customer loyalty just as much as having first-class products. It has allowed Apple to enjoy a considerably higher average markup on prices -- about 40 percent, a lot less than other retailers but extraordinarily good for electronics -- even as its reputation for outstanding quality, performance and service continues to dominate its rivals.
The video, which was made in the summer of last year and probably not intended to be seen by the public, seems uncannily prescient in light of former retail head (and Johnson's successor) John Browett's departure from Apple. Browett, who mostly maintained his predecessor's emphasis on elegance and environment in creating stores, garnered a lot of bad publicity through a series of moves intended to make staff more efficient and less able to spend time with customers.
His actions were perceived by both workers and the public as trying to maximize profit in an already-extremely-profitable chain at a cost of some of the personal service and high morale customers have come to expect. Following complaints, he retracted most of his own plans and raised wages but was still ultimately shown the door.