New Stores, New Design

September 13, 2006

Two new Apple stores will open on September 23rd, and both will include new design features inspired by the Fifth Avenue (NYC) store, according to remarks made by Sr. V-P Retail Ron Johnson during an investment conference in San Francisco today. At a noon-time session of the annual ThinkEquity Partners, Johnson said the “next generation” of architecture and interior design will be unveiled at the Providence Place (RI) and The Mall in Columbia (Md.) stores. Johnson also said that the company intends to continue opening stores at the same pace, about 40 stores annually.

Much of what Johnson talked about has been reported here before. However, he did reveal some new details about the stores, including the chain’s employee turn-over rate, and the success of the Apple Camp and ProCare programs.

During his 45-minute talk, Johnson recalled the development of Apple’s retail concept and summarized its success. He noted that a single Apple store generates more revenue that their typical neighboring stores combined (Ann Talor, American Eagle, Abercrombie, Pottery Barn, Gap). Also, a single Apple store is much smaller than a typical 38,000 square-foot Best Buy store, yet generates 67% of the revenue of a typical Best Buy.

Johnson said that much of the chain’s success comes from leveraging Apple—the available cash, the products, the marketing expertise, the efficient supply chain, tight financial controls, effective human resources, and the sophisticated software systems. “We had an advantage that the chain was built out of Apple,” he said. This advantage let Johnson focus on the customer issues, he explained.

He recalled the retail days of 2001, when Gateway was “moving metal,” and not focusing on the customer. Innovation and enriching lives were the two key goals of the planned Apple stores, he said. He described innovation as being, “this amazing intersection of someone’s imagination and the reality in which they live.” He described how we’re all trained from birth that we can’t do certain things, and recalled the “reality filters” he encountered while working at Target.

Johnson said when he arrived at Apple, he met with Steve Jobs. “Now…my boss has no reality filters,” he said to laughter from the audience. Preconceived notions of retail went out the window. The stores were intended to be a space for everyone, and not to focus on a particular demographic, which was common at the time. Stores would be located where people live, and work, and play, and shop.

The stores were designed to provide hands-on use of the computers, face-to-face help, next-day repairs, and one-on-one training, all features that were foreign to retailing back then. He told the group about the activities held in Apple store. School Nights are every Tuesday, while 20,000 children participated in this summer’s Apple Camp program. Also, Apple’s ProCare program brings people into the stores, and Johnson revealed that there are “over 100,000” ProCare members now.

Johnson talked about hiring great employees, and noted that the turn-over rate for Apple store employees is just 20 percent. The industry typically suffers from a turn-over reate well over 50%.

He showed a video about the design of the Fifth Avenue store, noting that “every little detail is thought through” when creating the stores. “The fun is in the detail,” he said.

As for the new store design, Johnson said it was inspired by the Fifth Avenue store, instead of something from the past. He would only say that the design will use the same footprint, but focus more on customer service to allow the store staff “to do a significantly better job.”

Surf here for more detailed quotes from the talk.

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