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Retail Management APPLE RETAIL STORE Retail Management APPLE RETAIL STORE BY ANKIT VASHISHT KARAN ARORA VAIBHAV KAPOOR Origins of the Apple Store Apple CEO Steve Jobs decided to build Apple Stores as a defensive move in the late 1990s, a time when big box computer retailers refused to stock its Mac computers due to the weakness of the Apple brand. Jobs brought Millard Drexler, then-president of the Gap, onto the Apple board in 1999, specifically to help shape a retail strategy. So many Gap employees migrated to Apple's early retail team that they joked about working for "Gapple." Drexler pushed for the hire of Ron Johnson, then a Target executive, who would shape such Apple Store fundamentals as the Genius Bar and scripted customer service approach before announcing his departure Tuesday for the CEO job at JC Penny. Apple built a "prototype store" in a Cupertino, Calif. warehouse and tested its retail concepts for a year before opening the first two Apple Stores in Tyson's Corner, Virg. and Glendale, Calif. Apple’s Success Formula. Most commentators dwell on the obvious but superficial features of Apple‟s success including: the good design (airy interiors and attractive lighting, a carefree and casual atmosphere); attractive products (strong demand for the products) and focus (a single brand with far fewer products) scale (only a few hundred stores compared to Best Buy‟s more than 4,000) and clever marketing (the Steve Jobs factor). Yet firms that have tried to copy these features like Best Buy [BBY] (which has copied the Geek Squad) and Microsoft [MSFT] (which opened its first branded store in 2009 with some of Apple‟s architectural and customer-service ideas), have had less success. This can lead analysts to throw up their hands and declare that “it‟s just magic!”, i.e. success that is inexplicable by any rational process. The Paradoxical Principles Behind Apple’s Success In reality, Apple‟s success is based on deeper principles that are neatly reflected in an interesting article by Yukari Iwatani Kane and Ian Sherr in the Wall Street Journal (Secrets From Apple’s Genius Bar). The article draws on confidential training manuals, a recording of a store meeting and interviews with more than a dozen current and former employees. Many of the principles will be counter-intuitive to any manager steeped in traditional management practices or retail, but obvious to any observer of radical management: Stop Trying to Make Money Most firms see themselves in business to make money. That‟s “the bottom line”—the primary goal of management. By contrast, Apple‟s goal is to delight its customers. Apple has grasped that making money is the result of the firm‟s actions, not the goal. By delighting the customer, Apple ends up making more money than it would if it set out to make money. The goal of “delighting the customer” leads to radically different managerial behaviors from traditional retail. Don’t Try to Sell One consequence is that employees are taught not to sell. Kane and Sherr write: According to several employees and training manuals, sales associates are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems. “Your job is to understand all of your customers‟ needs—some of which they may not even realize they have,” one training manual says. To that end, employees receive no sales commissions and have no sales quotas. “You were never trying to close a sale. It was about finding solutions for a customer and finding their pain points,” said David Ambrose, 26 years old, who worked at an Apple store in Arlington, Va., until 2007. Kane and Sherr note that although there are no sales quotas, employees who don‟t sell what‟s expected are re-trained or moved to another position, depending on the store. Belief In the Goal of Delighting the Customer A firm cannot delight its customers unless the people who work in the firm believe in what it is doing. The sales people in Apple‟s stores “believe” in Apple and its products. The fact that Apple recruits from its adoring fans obviously makes it easier for them spread the message of delight. When a new product is launched, such as the second-generation iPad in March, employees cheer customers as they enter and exit the store: eliciting such behavior authentically is only possible if the sales staff really believe in what Apple is doing. –Continuous Innovation: Delighting customers requires continuous innovation. Many retailers strive for good customer service and attractive store designs, but few go to Apple‟s lengths in continuously improving every detail. With respect to store design, “most retailers take a prototype and roll it out,” Apple by contrast “constantly evolves its stores‟ look and feel,” said Brian Dyches, president of industry group Retail Design Institute. The stores are for instance phasing out that ubiquitous but irritating feature of retail stores, the cash register, by enabling sales people to complete transactions on mobile devices. –Operationalization of How to Delight Customers: Instead of starting with what Apple has to sell, the sales staff at Apple start from where the customer is and what the customers problems might be. Apple operationalizes its “steps of service” in the simple acronym APPLE: Approach customers with a personalized warm welcome; Probe politely to understand all the customer‟s needs; Present a solution for the customer to take home today; Listen for and resolve any issues or concerns; End with a fond farewell and an invitation to return –Attention to detail: Kane and Sherr note that Apple‟s control of the customer experience extends down to the minutest details. The store‟s confidential training manual tells in-store technicians exactly what to say to customers it describes as emotional: “Listen and limit your responses to simple reassurances that you are doing so. „Uh-huh‟ „I understand,‟ etc.” –Discipline: Just as there are rigid deadlines in Apple‟s product development, so there are rigid deadlines for retail employees. Apple employees who are six minutes late in their shifts three times in six months may be let go. You can‟t delight customers if you are not there. –Recruiting and training the right people: Department store chain Nordstrom Inc., for example, provides little customer-service training and expects sales staff to learn on the job. By contrast, Kane and Sherr note: Working for an Apple store can be a competitive process usually requiring at least two rounds of interviews. Applicants are questioned about their leadership and problem-solving skills, as well as their enthusiasm for Apple products, say several current and former Apple store employees. While most retailers have to seek out staff, retail experts say many Apple stores are flooded with applicants. Once hired, employees are trained extensively. Recruits are drilled in classes that apply Apple‟s principles of customer service. Back on the sales floor, new hires must shadow more experienced colleagues and aren‟t allowed to interact with customers on their own until they‟re deemed ready. That can be a couple of weeks or even longer. –Loyalty: In return, Apple asks for extreme loyalty. According to Kane and Sherr: Employees are ordered to not discuss rumors about products, technicians are forbidden from prematurely acknowledging widespread glitches and anyone caught writing about the Cupertino, Calif., company on the Internet is fired, according to current and former employees. Bottom Line: Radically Different Management The obvious, superficial features of Apple‟s modus operandi—the good design, attractive products, the focus, the limited scale and the clever marketing—are certainly part of the Apple story. But they would mean little without the radically different management philosophy, which drives Apple‟s success. The fact that the principles are counter-intuitive to any manager steeped in traditional management practices or retail commerce indicates that any firm seeking to emulate Apple‟s success will have re-train their managers in radically different ways of thinking, speaking and acting in the workplace. Personal setup Here‟s some of what Apple cover during your Personal Setup session: Mac Apple show you some of the key features of your new Mac. And apple set up your email, install any software you purchased, and help you discover and download some great apps from the Mac App Store. iPad Apple set up your email and help you personalize your new iPad. Apple also teach you some tips and tricks, set up Find My iPad, and help you find and download the perfect apps. iPhone Apple transfer your contacts and set up your email, calendar, and Find My iPhone. Then apple help you shop the App Store and download apps that match your interests. iPod Buy an iPod touch and apple set up your email and help you download apps and games from the App Store. Buy an iPod classic, iPod nano, or iPod shuffle and apple teach you how to import music, create playlists, and sync content from iTunes. Workshops To get to know your new Apple product even better, join us at the Apple Retail Store for free workshops created for new owners just like you. In our Getting Started workshops, you‟ll learn all the basics — from changing settings and preferences to downloading new apps — and come away with tips and tricks. And our Going Further workshops will help you take your skills to the next level as you discover advanced techniques to help you get the most from your new product. Phone Support If you have questions and you‟d like to speak to someone on the phone, our Apple Support team is here to help.
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