A key figure in achieving Apple’s ground-breaking retail store concept is now consulting with Microsoft on that company’s retail stores, the first of which are expected to open this fall. George W. Blankenship, 56, joined Apple in 2000, and his 20 years of experience as Gap Inc.’s vice president of real estate strategy helped fulfill the original concept developed by Apple Sr. V-P Retail Ron Johnson–position the stores at upscale, high-traffic locations to attract customers. As first reported by TechFlash, Microsoft has hired Blankenship to provide consulting services for its retail team, although the company refuses to say exactly what work he is performing. The consulting arrangement is probably meant to work around the non-competitive agreement (NCA) that Apple executives routinely sign when leaving the company. Much of the data that Blankenship might use to pick Microsoft store locations is held by third parties, so he won’t be handicapped by any NCA. As well, Blankenship’s assistance to Microsoft won’t create any peril for Apple, since after eight years of developing new Apple stores, the formula is hardly proprietary.
Blankenship was among the earliest of Apple’s retail store employees, arriving shortly after Johnson. He was there when Johnson began to clarify his vision of how the stores would operate and what they would look like, and where they should be located.
Johnson’s decision on locations flew in the face of the best computer retailer at the time, Gateway. At its peak in 1999, Gateway had over 240 retail stores. But to save money, the company located them in inexpensive, stand-alone spaces that were usually far from shopping malls and other busy locations. The locations meant that each location average just 250 visitors a week, according to Johnson. He rejected the notion that inexpensive leases were necessary to help a company’s financials, deciding instead that the high-traffic of upscale malls would generate more sales, fully justifying the additional expense.
In a 2006 speech to an investment group, Johnson recalled the early planning: “If you want to enrich their lives, you can’t be in a parking lot, off a highway. You gotta be where they live their life. You gotta be right where they work, where they play, where they live, where they shop. The only way to enrich their life is to be part of their life. They’ve got to walk 10 feet to your store, not drive the car 10 miles. That’s what enriching lives would take.”
Because of that decision, Apple has located in some of the most expensive real estate in the United States and around the world. In some cases, Apple’s choice of a store site has jump-started the location’s exclusivity. And in many cases, the presence of an Apple store has attracted other retailers, many of which demand in their contract that their store be close to Apple.
Gateway began decelerating its retail efforts in 2003, the tail end of an overall decline in revenues from competition and national economic decline. In April 2004 announced it would close its remaining 188 stores and lay off over 1,800 employees. Gateway soon purchased eMachines, hoping to leverage that company’s access to retailers like Best Buy and Circuit City. Within a year, Gateway’s stores were gone, and the company continues to limp along today.
Now, with over 250 Apple stores, the process of finding suitable locations and screening them for profitability has become routine. Apple uses various consultants and computer software to analyze its customer lists, and to find appropriate spaces that meet various location, space and lease requirements. Although the process is largely automated, many store locations are still selected less for their computer “success score,” and more for the opportunity to create an architectural statement or “home” for Apple enthusiasts.
Read more of Johnson’s recollections of the early planning for the Apple retail stores.
Microsoft has begun to hire retail store executives and managers. Download (pdf) job descriptions for two of Microsoft’s upcoming retail store positions.E-mail this story