Apple Looks for Bigger Slice of the Retail Market

Discussion
Jun 02, 2009
Tom Ryan

By Tom Ryan

Tweaking its already
wildly successful format, Apple plans to remodel 100 stores this year to
create space for customer training and displaying products. It’s also overhauling
its one-on-one instruction programs.

In an interview last
week with USA Today, Ron Johnson, Apple’s senior vice president
of retail, said new tables will provide room for “twice the amount” of
products on display, and its Genius Bar, the tech support stations, will
be expanded by 50 percent.

In addition, its One
to One training program is being changed in several ways. Currently, anyone
with $99 can sign up for a year of unlimited training on Apple computers
and products. But beginning June 2, Apple will limit sign-ups to people
who buy new Macs at Apple Stores or via its website. Additionally, any
of the 500,000 current One to One subscribers can renew.

“We originally set
up One to One to get people to switch to the Mac,” Mr. Johnson said. “Now
we want to expand it to make it even more relevant to people who have bought
their Mac.”

The annual subscription,
still priced at $99, includes personal setup, transferring of files from
an older computer (Windows or Mac) and help with projects. Other changes
include increasing each session time to a maximum of three hours, up from
one hour. But contrary to its “one on one” name, each
session may now include up to three participants.

The remodels come as
sales of Apple
computers slid three percent in its most recent quarter. While still
strong, traffic at Apple’s stores has also come down
compared to last year when long lines followed the introduction of the
second-generation iPhone.

Apple also plans to open
25 more stores this year, including a fourth location in New York City,
and new ones in Paris, Italy and Germany. At the end of its second quarter
ended March 28, it had 252 stores.

“We know that a
lot of people are cutting back, but we’re doing the opposite,” said
Mr. Johnson, a former Target executive who joined Apple in 2000. “We’re
investing in the downturn.”

CNET’s Jim Dalrymple said the renovations should enable the stores
to be more creative around its training sessions.

“One of the highlights
of the stores that have them are training theaters,” wrote Mr. Dalrymple.
“Apple Store employees, third-party companies, and other professionals
often put on seminars showing users how to get the most out of software and
hardware products. Apple even participates in events like the trendy Tribeca Film Festival, inviting entertainers like Spike Lee
and Natalie Portman to give sessions.”

But PCWorld’s Dan Moren believes
the moves to accommodate multiple trainees and restrict sign-ups in its
One to One programs suggests an attempt to rein in costs.

“The changes could
mark a sign of Apple streamlining its process and trying to do more with
less,” wrote Mr. Moren.

Discussion Questions:
What do you think of the remodeling efforts at Apple’s stores? What moves
will be particularly beneficial? Are there any that have you concerned?

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16 Comments on "Apple Looks for Bigger Slice of the Retail Market"


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Joel Warady
Guest
Joel Warady
11 years 11 months ago
We have discussed the success of Apple’s strategies many times. And this new retail strategy seems to have success written all over it. Apple likes to invest and to innovate. The Apple store itself was an innovation that other technology companies continue to try and mimic. Now Apple has figured out a way to move the store into a new direction. When the retail strategy first started, Apple was looking to introduce their products to consumers who were familiar with the brand, bit not necessarily familiar with the products. Now that they have gained significant market share, they need to move to phase II. Allow more people to trial their products, and sell more product. With respect to the One to One training, again it makes perfect sense. The initial training was to familiarize people with the Apple brand, and get them used to purchasing Apple products. Now they want to make Apple users, Apple experts. The more people who learn to do things on their Macs, the more they will talk about the Mac… Read more »
Doron Levy
Guest
Doron Levy
11 years 11 months ago

How can you improve upon what is already good? Apple realizes that the sell will need to become harder. As people cut back, they may not have those extra dollars for an Apple product. Apple is able to sell their products well through in-store demos. Adding to that concept will enhance the ‘selling process’ for them. It’s all about getting the customer to say yes during that selling process (which begins the moment their foot crosses the threshold).

Apple is also really good at understanding how their products are used. The demos I’ve seen are usually for the hottest and latest graphic design software or video producing suites. They also understand the frustrations of their competition’s customers. Their stores are racked with messages empathizing the plight of the Window’s user. They have perfected the retail equivalent of the rope-a-dope. Deploying these new ideas at the store level will increase walk-in sales.

Mel Kleiman
Guest
11 years 11 months ago

Great move in today’s world. If you do not change and innovate, the world will pass you by. Contrary to the polling question which ask which item was going to have the biggest effect. This looks like a package deal designed to give the customer more of what they want and help MAC retain it position as a company that is not only interested in selling product but doing all it can to help people get the most out of what they have bought.

Nothing but a win win for MAC and the customer.

Anne Howe
Guest
11 years 11 months ago

I live with an Apple brand evangelist–my 20 year old son. I adore his energy and passion for the brand, the products, and am delighted to see him truly enjoy his experiences with the company, the stores, etc. It’s powerful for me as marketer to observe and engage in.

Apple’s effort to remodel stores and continue to enhance the opportunity to develop more of these kind of folks is a really smart move. Now, watch them get the netbooks out!

This is how I see their strategy playing out in the future. When all these young evangelists get into the workplace, and have to convert to PCs, they will be like a crazed bunch of animals, forced into cages. And they’ll eventually make change happen in corporate IT, allowing more flexibility and freedom to choose what platform you want to work on. And when that happens, Apple wins the war. Today, they are arming the troops.

Kevin Price
Guest
Kevin Price
11 years 11 months ago

In so many retail outlets, ‘big, dramatic change’ is often operations-driven and unnoticed by the consumer. Apple’s changes, however, have ‘customer-driven’ written all over them.

To be fair, many retail outlets are selling others’ products (with the exception of the awful job generally done with private label) while Apple is selling its own, excellent and superior products and services. But the resulting advantage Apple has in developing a merchandising strategy consistent with and supportive of their product and service strategies enables Apple to kick the [stuffing] out of others’ retail performance.

Maybe, someday, someone in the rest of the retail world will also ‘think different’ and become customer-driven in action (to go along with their tired, often-repeated words of being customer-driven). Until then, the retail world overall will continue to struggle.

Bill James
Guest
Bill James
11 years 11 months ago
Being an Apple user myself for my corporate system as well as personal at home, the Apple brands are permeating and in certain cases dominating their respective segments. iTunes and the iPod are the defacto standard for MP3 and personal music enjoyment. The Macbooks and iMacs are slowly gaining share in a cluttered and noisy PC world. The Apple platform will become over time on par with its PC counterpart in the corporate world. Today, most graduates from high school want a Mac to take to college, and Apple makes it easy for them to get into their architecture. The O/S is superior in its ability to seamlessly integrate many facets of your life, video, music, digital photo, and telephony, all of which young people work with on a daily basis. I agree, they are arming the troops with the new products that will drive their business for decades. They make them easy to use, easy to upgrade, easy to expand, and easy to buy. It’s a recipe for success which many retailers should look… Read more »
Jonathan Marek
Guest
11 years 11 months ago

Remodel of showcase stores is a subspecies of “design.” And design is what Apple does best. I wouldn’t bet against them on this one!

Camille P. Schuster, PhD.
Guest
11 years 11 months ago

Providing help for how to do what you want to do once you have an Apple product is certainly a powerful innovation that generated brand loyalty. It is not inexpensive but is extremely effective. My machines always do more things than I know how to access and I am constantly learning how to do new things. Having that kind of support and guidance is a great asset.

Mary Baum
Guest
Mary Baum
11 years 11 months ago
“The Apple store itself was an innovation that other technology companies continue to try and mimic.” Of everything we’ve said so far and everything we could possibly say in this forum, this is the money quote: either you get it or you don’t. Now, Apple evangelist that I am–and have been for almost half my nearly 49 years–I’m not talking about Apple specifically. (Though they’re the example under discussion and certainly my favorite example.) I’m also talking about Trader Joe’s. Whole Foods. Toyota – especially Lexus. Target. Amazon. Adobe. Costco (I think). Nordstrom. Panera Bread. Either you get it or you don’t. Even long after you’ve gone public and have a market cap in the tens of billions, you’ve got to know why you’re in business: What you stand for in the customer’s eyes. What experience your customer counts on you to deliver. What problem your customers expect you to solve. And, key in this economy, what you need to do to exceed customer expectations and achieve that all-important holy grail known as customer delight.… Read more »
Doug Fleener
Guest
11 years 11 months ago

Investing on creating more brand advocates and educating the ones you have has to be a smart investment. Of course the training theaters and other activities drives repeat visits and that will translate into additional purchases.

As a Mac user and a regular Apple store shopper, I give the remodels and changes two thumbs up.

Ted Hurlbut
Guest
Ted Hurlbut
11 years 11 months ago

Even in the downturn, Apple continues to push ahead, investing in their stores, in ways that will improve their service and customer experience, and further creating space between them and any would-be competitors.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
11 years 11 months ago
I wonder if the CAD/CAM program used to design the Apple remodels was the top-of-the-line, PC-based Autocad, or one of the significantly less robust programs from Apple. I was a Mac Daddy from ’88 to ’98. An evangelist. Then I was forced to embrace the PC and I’ve never looked back. I run a flamethrower XP notebook and a flamethrower Vista desktop simultaneously (and at the same time) from my office, and have few problems. I used to be drawn to Apple stores like a myth to an urban legend, but no more. The eye candy grew too expensive and far less bidness-oriented, especially in international applications where my needs are focused. My son the software designer (subimage.com), prefers Macs. That apple fell a little distant from the tree. But, truth be told, he leans to graphic design and caters to other designers and various small businesses in the legal and healthcare arenas. Perfect for Mac apps. And therein lies a truth: Macs are expensive and cater to individual users with little inclination to understand… Read more »
Johan Sauer
Guest
Johan Sauer
11 years 11 months ago

I experienced a buying occasion in an Apple store just yesterday. My son turned 13. His wish list? A MacBook or an iPhone! There is no comparison between that brand engagement experience and the sterile environment of a big box outlet or online store. Even in the downturn, the place was packed.

My take is that, by NOT expanding critical brand ‘touch points’ like the Smart Bar and one-on-one, Apple would be creating risk. On my visit, these critical areas were completely overwhelmed with customers. A bad experience creates negative brand equity. Creating more of what makes the brand special, together with the smart, brand-appropriate store design, will keep Apple special. My PC is looking rather drab these days….

Jerry Gelsomino
Guest
11 years 11 months ago

While the reasons for changes to the One To One training are not clear, Apple is making so many revisions to the stores and operations, I am not sure why any Mac-Fanatic wouldn’t be pleased. It appears that they are expanding the range and reach of their products and services. In addition, remodeling the relatively fresh stores sooner than normal in the retail world, Apple is pre-empting the their stores getting tired-looking. Good job!

Mark Price
Guest
Mark Price
11 years 11 months ago

Apple is investing in the customer experience to further differentiate themselves from other retailers. At this time of declining margins in computers and computer retailers going out of business, Apple is increasing the number of stores. How do they do that, and still retain healthy margins in a category that is going more and more generic every day?

Why buy a Mac in the first place?

Consumers buy Macs at Apple stores because it is easy and fun to learn about the computers, complete transactions and get to work quickly, which are key factors in computer purchases. As the company increases their customer support and experience, they continue to distance themselves from the competition.

Mark Lilien
Guest
11 years 11 months ago

Apple’s One to One grosses $50 million annually. Not a bad subsidy for performing customer service. I’m sure it’s a money-loser but without it, more would be lost. Just think of the word-of-mouth. Apple’s best salespeople are its customers.

For every Mac fan you meet, how many Vista fans do you meet?

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