Has the Apple Store Lost Its Uniqueness?
While Apple’s stores have long been heralded as retail shrines for their sharp design and top-notch service, a recent article in The Wall Street Journal states that they may now be getting hurt by their sameness.
"Just as Apple’s products have become ubiquitous, the format of its stores has become commonplace," claimed the WSJ article.
The report followed up on the company’s third quarter earnings, which showed that Apple’s stores dipped slightly, marking the first decline since 2009. The report also showed that, while sales per square foot were an enviable $4,542, they were down 4.5 percent from $4,754 in the same period a year earlier, according to Customer Growth Partners.
Part of the problem may be a lack of direct leadership. The VP of retail position has been empty since October 2012, when John Browett exited after only a six-month stint.
The article also said weakness may result from the lingering impact of policies put in place by Mr. Browett, who enacted severe cost-cutting measures. These included reducing budgets for employee events, training, offsite meetings and basic supplies. Interactions with customers also shifted from a focus on customer service to driving sales. Staff assigned to educating customers have been moved to the sales floor in between classes, according to the WSJ.
Tim Cook, Apple’s CEO who is overseeing the retail business, has been reversing many of these moves.
Still, some indicated that part of the problem is that other stores are becoming good at copying Apple Stores’ aesthetics and selling approach.
Craig Johnson, the head of Customer Growth Partners, noted how the Apple Store experience used to surprise guests because it changed so frequently — from its early emphasis on one-on-one education and, later, the use of iPod Touches as cash registers and engagement tools.
"Apple needs to recreate and reinvent its once novel retail model, which is now not so novel," Mr. Johnson said.
In a column earlier this week for The Exchange, Yahoo Finance’s blog, Brian Sozzi, an analyst at Belus Capital Advisors, wrote that the stores are also being hurt by a "very methodical, outright slow, new product launch schedule" in the face of innovative new products being rolled out by competitors in the mobile space.
Discussion Questions
Has the Apple Store concept lost its point of differentiation with competitive retailers? Has the concept’s success been more product-driven than generally credited? What changes, if at all, would you make?
Apple had a store performance dip due to non-store thinking management decisions. The WSJ does not know or see how dedicated many Apple customers are to their local Apple store. They go there to learn, get ideas, see new tech, and buy. After the management team changes, the stores will change and I would put a major push on getting the baby boomers back in the stores. The Millennial beasts will show up no matter what. The baby boomers are the ones that should be targeted to be taught—taught how to use Apple to leverage the internet and grab the memories of their past—from iPhoto album creation training to Facetime use.
Lots of money in retail tools that support memories. Hit “home” and “heart” to get more wallet.
Tom…GO APPLE!
I think Brian Sozzi hit the nail on the head: The best cure for what ails The Apple Store is a stream of innovative new products that can be sold most effectively by the Apple sales team. Until this happens, the best Apple can do is to reverse some of the mistakes made by its previous management. At the same time, it’s worth putting elements of the store’s design under some scrutiny, since there are more effective imitators in the marketplace than a few years ago. (The Samsung Experience shop at Best Buy comes to mind.) It might be time for a design reboot, in the way that the upcoming iOS 7.0 is promised to be a radical rethinking of Apple’s mobile interface.
Yes, sales per square foot have dropped to a meager $4542, only double its closest competitor. It’s always good to find something to write about, I guess.
Of course, the hiring of Browett was a “what were they thinking?” moment, and it’s also true that the product roll-out schedule has been really slow and incremental, rather than disruptive. And no addressable markets are infinite. Apple could be reaching the top of its market. But who would you rather be today: Microsoft or Apple? And given the late-night veto of the ITC’s ban on older Apple products, I probably would rather be Apple than Samsung as well.
I will say the “geniuses” seem to have lost a few steps. I had an arduous personal experience with one a few months ago…who just didn’t know what he didn’t know. Having said that, it just would take some hands on leadership to get the stores running more smoothly again. That’s the one change I would make—get someone charged with running the retail business.
The shine is off the Apple! They changes to the store have slowed and the fast followers (Microsoft and others) produced stores that look and feel the same.
The product is driving the concept, not the store design. I would put my money that after the fall product release, we will see a lift in sales for the stores.
If a product launches—either Apple TV or the Apple watch—it can translate to a change in the in-store experience. I think that would be a good catalyst to rally behind.
The customer experience at Apple stores is still something special that other retailers can still learn from. Simple displays and clean lines are great, but the amazing staff and customer experience is really what drives people to the store.
Store sales are down because Apple has not delivered a new, innovative solution in the last year.
The only change I would make is reinstate the budget for staff training and events. What makes any store special and worth visiting is the staff and the customer experience they help deliver.
I would reverse all changes enacted by Mr. Browett and employ a skilled, vision-driven retail leader. It’s amazing how companies start with a concept that actually works and then spend time and resources to change it. The marketscape in 2009 is different than what we are experiencing today, so severe cost-cutting measures made sense.
The Apple store is supposed to create desire and wonder, a place for people to fall more in love with Apple products because of knowledgeable staff, to play with the new product, or just hang out. The focus to selling rather than imparting knowledge from the staff is a misstep. I would also agree with Brian Sozzi about the new product launch schedule, but the wait and creating desire is part of the reason why Apple products have done so well.
Perhaps a happy medium can be reached to entice the public but at the same time deliver relatively new ideas/products at an accelerated pace.
I’m with Paula—all retailers should be “suffering” with such terrible sales.
Why the dip? Lack of truly new products may be part of the answer. So is market saturation, especially at the price point. Are the stores in terrible shape? Of course not. Could they use a face lift and a new philosophy? What retailer can’t?
I wouldn’t order the funeral flowers just yet. They’ll figure it out.
The “Apple Store concept”, whatever that means, is largely driven by the products in the store, first and foremost, followed by the unique experience Apple creates. As such, Apple is not even close to having “lost its point of differentiation with competitive retailers” since its main “point of differentiation” is its products…which most competitive retailers cannot offer. And even those retailers who DO offer Apple products are hardly close to the experience (e.g., Best Buy???…please!).
At a mere $4,542/sq ft, with no new ‘breakthrough’ iPhone-type products recently, it’s hard to conclude they’ve “lost [their] uniqueness.” Almost laughable.
Well, it’s anecdotal, but I happened to be in the Apple Store on 59th and Central Park South in NYC yesterday. It was crowded beyond belief at 3PM on a Wednesday. The busiest store I have ever seen other than FAO Schwarz around Christmas.
Paula, as usual, has hit the bullseye. How many other retailers would want sales of $4542 per square foot? The next step is to put someone in charge whose sole focus is building on what is there.
Of course Paula’s point is spot on. Performance may be dipping, but it still surpasses others far and away.
I would just like to add that this issue is what retail is all about. You have to have the right products, mix, services, atmosphere, etc., to get customers into your store and keep them coming back. Retailers must always be in touch with their customers in order to know what they want and expect from the brand.
Now that the initial ‘shine is off the apple’, it’s time for them to put their noses to the grindstone and become retailers.
Another vote for Paula’s comments.
My experiences with the Apple Stores (and there have been many) have been fantastic. Friendly, courteous, knowledgeable and effective. Can’t think of another store, except perhaps Nordstrom, where the experience has been so positive. Sure, others may be copying the format but they are not copying the attitudes and competencies of the sales people.
Apple has also done a good job connecting the product experience with the store experience. Compare that to the local Microsoft store that has the surface (unfortunate pun) look of the Apple Store, but not the products to support and enhance it.
No it hasn’t lost anything. Apple set a new standard that others tried (and I emphasize tried) to emulate.
New product innovations and some minor tweaking to their store model will help sales per square foot soar while others simply remain “sore.”
Okay so, their ding on sameness takes them from $5000 to “only” $4000 a square foot? There’s a little contrarian hype involved with this in terms of performance, don’t you think? Even if that happened, they’d still be 8X average.
But—from a pure design perspective, there’s definitely something to the WSJ’s point. Their stores ARE boring, functional and same-same. No doubt about it. And that may haunt them if they don’t evolve.
But I wouldn’t worry about that too much if I were Apple. Their people are what really make those stores go. They GET service like no other retailer (maybe Starbucks and Nordstrom) and as long as that persists and they don’t fall asleep on the product side, they should be just fine (understatement).
The concern that the Apple stores are suffering from sameness and thus have become boring is misaligned with this segment of the retail market. Information Technology humdrum is a symptom of the product passing its life cycle and in need of an upgrade. IT is a business that is loaded with prestige buyers and last years any thing is as “so what!” as you can get. Apple’s continuing strong sales are momentum driven largely because of name recognition and, of course, the exemplary ease of use.
A quick gander at the way-back machine will uncover a history of a company that suddenly and inexplicably stopped rolling out new and/or improved product. The sales numbers discussed here today seem to be saying that they are stuck, once again, in more of the same mode. Not a good place to be in the IT industry, where the consumer need for change is ravenous.