More Than A Store
During the press event, Sr. V-P for Retail Ron Johnson gave the press a presentation in the second-floor theater of the store. At
the risk of picking apart every word of his talk, I've summarized some portions to provide some insights into Apple's retail
store operation. 3-5-2004
|During Johnson's 24-minute presentation to the press in the second-floor theater of the San Francisco, he revealed some tidbits of information, some new and some that just confirmed past reports:
During Johnson's well-organized presentation, the concept of "community" was raised several times, and in many contexts. If you listen to the words, and study the stores monthly calendar, it becomes obvious what Apple intends to accomplish with its retail stores, beyond selling products-- making the stores a meeting point for Macintosh users, and utilizing every aspect of the store (theater, Internet café, iPods, kids section, etc.) for every hour of every day.
Johnson began his presentation by saying that back in 2000, when the company first began studying a retail operation, "Our very first priority was to get a store in San Francisco, which was our home town." He said it took four years to find the right location, "and to build what we think is the nicest, one of the nicest stores we've built. And we love this location, because it's the bridge between Union Square and all the development on Market, and as you move south to Moscone (Convention Center). And we think by having stand-alone presence here on this corner, there's great visibility, the chance to present our vision of a great design on the exterior and the interior was worth the wait."
He noted the other five stores in the Bay Area, three added in just the past year. "Now in the heart of San Francisco, the entire Bay Area will have a chance to experience an Apple store. So we love our real estate position in the Bay Area. We think we're on all the great streets, in all the great centers, in all the great neighborhoods."
He noted the company had 75 stores in the United States. "To put that in perspective, a retailer that we admire, like Crate and Barrel, just opened, right up the block." He said they now have 75 stores. "They've been doing this since 1961, and they've got great coverage, great branding."
He displayed a map of the Apple store locations, and pointed out, "As you can see, there aren't many markets that we haven't had an opportunity in 33 months to put a retail store." His remark seems to indicate that the pace of grand openings will slow considerably in the next few years.
He said that retail sales is about having "the right size store for the right market," and mentioned the five flagship stores that Apple has opened. "And they have a huge impact on the community where they are, but (also) a huge impact on the brand, because of the way people travel, and think about big cities, like New York and Chicago and Tokyo and San Francisco, which is great."
From Apple's on-going survey work, they found that 97% of store visitors would recommend an Apple store to a friend. "People have a great experience buying in our stores," he said. In addition, over 50% of those buying at the store are buying their very first Macintosh computer.
When the retail stores were first opened, "It was truly to reach out to the other 95% that who live in a Windows world." He continued, "Today, even though Apple is a global company with big businesses in education and enterprise, one out of every seven dollars that Apple generates, is generated in one of our 76 stores. One out of seven dollars that's generated as a company now comes from our own retail stores."
Johnson then explained the impact of opening a high-profile store in region that already has existing Apple stores. He explained that when they opened the SoHo (NYC) store, it bumped up sales in the seven other stores in the region. "And we very excited now, to have a chance to come to the Bay Area, where many of you know we have six stores in the Bay Area, three of those opened recently. And now we believe when we add this store in San Francisco, we're going to have the same type of impact."
Johnson then turned to perhaps the most revealing part of his talk, in which he went beyond stainless steel siding, product displays and the cash register.
Why do people like Apple retail stores, Johnson asked. "And it's really because in our idea we created something that's more than a store. This is a place that part of the community. It's not just a place to buy, it's a place to grow. Our stores are really welcoming for everybody. We find... it's amazing when you come to our stores, you have little kids, you have grandparents, PC owners, Mac owners...everybody comes to our stores and feels welcome."
He differentiated Apple retail stores from the other electronics chain stores, by explaining the inventory that Apple retail stores stock. "We carry the right stuff. If you look at our inventory when you tour the store, we're not like Fry's or Best Buy, which have a great role, to have broad assortments. But we like to just carry they stuff that we think is the best to extend your Mac experience, or your iPod experience. So it's an edited assortment of things that are guaranteed to work. We work really hard to carry the right stuff."
He said that Gateway is a place where you order a computer, and then it's shipped to you later. "This is a retail store," referring to the Apple store. "Every item is in stock, as best we can be. 99% of the people walk out of the door with their new Powerbook or new iBook or new iPod, today when they buy."
He said that every product in the stores can be test-driven before a purchase. "And that's really important if...when you go to a lot of retail stores, it's kinda just a place to pick up a product and go. But everything here can be test-driven." Further, Johnson said, everything is connected--computers, iPods, digital cameras, camcorders and headphones. He said the San Francisco store had about 40 iPods connected to headphones at various locations around the store. "So test-driving is a big part of why people like our stores."
On the subject of prices, Johnson told the press, "We have great prices. Our prices are at list prices, but we will not be beat. If there's a lower price in town, we gladly match that. Our idea is that we want to have the right price."
Unlike other computer retailers, Apple stores don't just sell you box and send you out the door. "One big feature of our stores is we customize everyone's Mac before they leave the store," Johnson said.
He elaborated by explaining that, "People love Apple products, and they kinda develop these emotional bonds with them. For some reason, Macs and people really go together--there's a passion about owning a Mac. We believe that experience should start before you leave the store."
So when a customer buys a Macintosh, "We take it out of the box, we set up your Internet account for you, we help you pick your first screensaver. If you bought a digital camera, everyone will make sure it works, they show you how, so the drivers are loaded correctly. If you bought a printer, we'll connect it and make sure you're ready to go. Before you leave the store, at no extra charge, we personalize your Mac for the customer."
He said that Switchers particularly like this customization feature. "In this day and age, people love that, especially people switching to a Mac. They find technology pretty hard. Open it up... do I have to read the manual, do I have to download some software... really complex. We make the "very difficult" easy, which ties our store brand, ties into Apple's ease-of-use value. So every product is customized or personalized before you leave the store."
Even Johnson's explanation of in-store support, repair and the Genius Bar alluded to the store's community focus.
"We have face-to-face support," he said. In a world of phone trees and phone help--which he said can be really good--"Now you have a place for any time you walk by the store, come on in, talk to someone face-to-face. We think that's really big important thing."
He said Apple stores offer rapid repair, and that the average turn-around on repairs of computers in-store is just under two days. Most people count on a 10-day time period for repairs, he said. "We repair every product in the store here itself--desktops, portables, you bring it here, it's diagnosed, it's trouble-shot, it's repaired right here on the floor, and you pick it up here in the store. So we have rapid repair.
And beginning on April 1st, Johnson revealed, "We'll have guaranteed next-day repair for pros."
He then returned to a more direct explanation of the stores as "community."
"And our stores are a place to belong. We have an Internet cafe that's open to the public every hour the store is open. Just come check your e-mail, you're waiting for something, you're from out of town, video chat with people. But when you put it together why people love our stores, it's because we really are more than a store."
Johnson asked the audience to "think about where you bought your last computer," and again turned to Best Buy as an example. "I'm an admirer of Best Buy," he said, adding that they had a great assortment of products, and had well-trained employees. "But no employee can know every product when you carry so many. You can't test-drive many of the products. Their pricing is good. They can't customize for you--you take it home and do it yourself. There's no hands-on training. There's no face-to-face support. They don't' do repair, or it's sent out and takes a long time."
On the other hand, "The experience in an Apple store is really quite different from anything on the planet, in terms of buying a computer. And we're really proud of that."
Johnson then turned to the store's employees. "Our stores start with the best people," he said. He said Apple had 16,438 applicants for the retail stores during 2003--"That's enough to fill many sports stadiums," he said. The company received 1,352 applicants alone for the San Francisco store. "The beauty of (having) a lot of applicants is you can select really great people."
He said Apple performs all the interviews, both by telephone and face-to-face, and did "hundreds" of face-to-face interviews for the San Francisco store. "There's a lot of demand to work in our stores," he said. "We have very low turn-over, by far the lowest in the history of retailing. You know, if you look at the turn-over of employees, our employees come, they join us for a career...and it's a real big part of our advantage."
The 70 San Francisco store employees collectively speak 15 unique languages collectively, he said, adding, "That's really important in a diverse, international city like San Francisco." He said most employees receive three to seven weeks of training before they come to the store.
Perhaps proving that Apple's "Switcher" campaign isn't dead, Johnson told the press, "One language they all speak is Windows. Our people are all trained to understand and talk to people with the Windows operating system, because it's really important if you're trying to switch people to Macs." He said that 50% of the store employees have "strong" pro experience, adding, "San Francisco is a real big pro market--lot of graphic design, lot of publishing, lot of creative people. So we have to be the best place for pros." He said at the San Francisco store, over 35 people are trained in applications such as Photoshop and Final Cut Pro--"different kinds of applications that pros care about."
"So it's not your typical mall, hourly employee," Johnson said. "These are really professional people." He explained that the retail store employees are not on commission, and are one of the few electronics retailers to do that. "We really believe that you should come in, and just have someone that wants to put you at the center of the universe, and take care of you, and it doesn't matter who helps you. It doesn't matter when you buy. When you're ready, we want to be there for you. But there's no hurry to get a sale today for anyone's pocket book. We're really here for the customer at the center."
He touched on a sense of community again while discussing the Genius Bar, Internet café and theater.
The Genius Bars are incredibly popular--20% of the people who come into Apple stores visit the Genius Bar. "Every hour the store is open we've got people who'll just answer your questions, bring in your computer, they'll help troubleshoot it for you. We only will charge money if we have to repair something, but most of the problems people have with their computers are software related."
He said the Geniuses can do quick software fixes right on the spot. "And we try to have you come in and get your thing up and running, and walk out that day." At the San Francisco store there are 12 Mac Geniuses. "They don't sell, all they do is serve. Twelve people there for face-to-face support."
The Internet café is connected to a high speed Internet connection, and is equipped with iSight cameras and iChatAV software. "So you can video conference, fun to go face-to-face with the kids when you're out of town."
Johnson then turned to the in-store events that are constantly occurring--about 250 opportunities (slots in classes, etc.) every 30 days, and all are free.
Every Saturday morning there is a "Getting Started" workshop, where the iLife applications are demonstrated. For most advanced users, there are Adobe and Final Cut Pro workshops every week.
"But even more than that," Johnson said, "every Wednesday is Pro Day at the Apple store." The Apple stores open one hour early on Wednesdays for pros. The Genius Bar staff is on-duty, there are special demos of business solutions, and all of the store's business Specialists are at hand. "We believe by being there one day a week for pros, that regardless of what your schedules are, when you think of getting more out of your Mac, you know you can stop by the Apple store and learn something."
Ah, yes...the Switcher campaign. "We're also here for switchers," Johnson said, explained that every evening at 6 p.m. Monday-Friday the Apple stores hold special workshops for people thinking about switching to a Mac. Their biggest concern, he said is switching to a new operating system. "The best way to get through that is to just test-drive it with hands-on support."
Every Tuesday night the store is over to the community for local schools. All schools have to do is call the store, talk to Megan or the team, and we'll set up a school night for the store, where families, teachers, parents and kids gather," Johnson said. "It's an amazing community event when we have these school nights in our stores."
Added up, each month there are 10,000 available opportunities in this theater, he said, taking the seats times the events--all free. "There's no charging. We want this to be part of the community. We want people to be here."
He concluded his talk with what was perhaps the clearest explanation of Apple's "community" philosophy.
"And if there's one message I'd like to leave you, I want you to be comfortable in knowing that this is truly more than a store. We're here to sell a lot of computers, and a lot of iPods. But the way that we do that is by just being a great member of the community. And this is really a place to get help, to learn, to try, to gather, to surf the net, and to buy a product. But when you buy that product, we're going to make sure it works for you, and that's why we personalize and do all the hand-on holding before you leave.
"At Apple, great service is great people, and a great environment. And that's what we've created."