Breaking the rules of retail

Dec. 19, 2007 | by James Bickers
This article originally published in Retail Customer Experience magazine, Jan. 2008.
It's the morning of March 10, 2007, and a sizable crowd has gathered at a sunny shopping center in Naples, Fla. The store staff, clad in black shirts, claps and chants as if at a pep rally. The general manager comes out and approaches the crowd, working them into a lather like the opening act at a rock concert.
"It's been a long time coming," he shouts at the would-be shoppers, and they shout back. "Naples knows how to party, is that right?" A chorus of applause is the reply. That applause continues as the doors are opened and the masses are allowed into the new Apple Store.
That level of excitement certainly is not typical for most retail store openings, but it is for Apple. There are more than 200 Apple Stores and, more often than not, they have been met with substantial fanfare, with customers waiting in line for hours just for the chance to get inside.
"Buzz trumps product," said Chris Ramey, chairman of the Florida Luxury Marketing Council, whose members include American Express, Jaguar and Sotheby's. "They've made Apple a fashion statement."
"The lines are another testament to the brand's strength and its ability to foster deep emotional ties with its customers," said Chris Anderson, director of marketing firm The Marketing Arm, whose clients have included Neutrogena, Proctor & Gamble and Wal-Mart. "There are, from time to time, store openings that are crazy, with consumers lined up early to get in. But in most cases, this frenzy is driven by price — that is, massive opening-day sales and giveaways, not because consumers genuinely love the brand."
It's yet another way in which the Apple retail experience flies in the face of logic: Not only does it eschew
Unlike typical opening-day frenzy, Apple Store customers aren't waiting for sales or giveaways. They wait — often for long hours and in all kinds of weather — because they love the brand. (Photo courtesy Apple.)
promotional pricing and giveaways, it actually charges for premium customer service ("One to One personal training," which goes for $99 per year). If you haven't made an appointment before you arrive, there's a good chance you won't be able to talk with one of the store's resident "Mac Geniuses."
And yet, sales are strong. Apple's stores produced about $1.3 billion in revenue in the quarter that ended in September, which represents about one-fifth of the $6.2 billion in revenue for company as a whole.
One word: Clean
The Apple retail experience is the result of a confluence of forces — product design, product availability and exclusivity, a palpable consumer buzz and store design. And when it comes to that design, one word continually recurs: clean.
"The design of the store fits with the design of the products themselves," said Gloria Barczak, professor of marketing and chairwoman of the marketing group at Boston's Northeastern University. "It is easy to see what is available in the store; it's easy to get to the products and try them out."
"Apple is able to employ quirky people who fit their own culture. For the first time, it is fun to interface with someone who you hope never dates your daughter."
— Chris Ramey, chairman,
Florida Luxury Marketing Council
"Minimalist" might be another way to put it. Apple Stores are built around wide open spaces, uniformity and simplicity of furnishings (basic, clean-lined tables that don't pull attention away from the products on them), and the psychological impression that everything is in its right place and nothing is frivolous.
Long-time Mac user Lon Cohen said the Apple Store resonates with customers because the experience of shopping there so closely mirrors the experience of using Apple products. "Everything that is good with the retail arm of Apple is what has always been good with Apple products," said the writer and graphic designer who has used the products for 20 years.
Anderson said the Apple Store design positions it as an opposite of sorts to more traditional retailers such as Wal-Mart, which emphasizes the size of product selection and the fact that "we have it all."
"I think a lot of retailers use what I call the kitchen sink approach," he said. "Let's throw everything out on the sales floor and we're bound to sell some of it. There's literally tons of stuff to walk through and sift through. At some point, you just throw your hands up and say, 'I'm exhausted, let's get out of here.'"
Product selection in Apple Stores, on the other hand, is limited carefully, with only a few options available in each category (games, for instance, or CD-burning utilities).
That less-is-more design approach has the effect of making the stores themselves relaxing. Factor in the ample selection of products that invite the customer to pick them up and play with them, and you've got a retail environment that fosters customer lingering.
And, according to Ramey, that limited selection has an additional impact on shoppers: There is ample room for over-the-shoulder watching, which can create a powerful psychological impact.
"Apple's product assortment is limited — particularly considering the physical size of most of the stores," he said. "Store design and merchandising is a substantial part of their success. Product is strategically placed so that customers have the room to watch other customers. Nothing makes you want something more than knowing someone behind you wants it too."
Or, to put it another way: There is room not only to see the product, but to be seen with the product.
Store overview and logistics
New visitors to an Apple Store will be forgiven if they look puzzled, particularly in regard to the check-out area. Where is it?
A recent remodel to many of the stores saw the removal of cash registers. In their place are wandering employees — concierges, in the company vernacular — who are armed with wireless card-swipe devices in a hip holster. When you're ready to pay for a product, you do so right where you're standing, and a moment later the concierge dashes off to the back room to fetch it for you.
Products are grouped by family — iMac, iPod, iPhone, MacBook — with a bit of intermingling at times to facilitate browsing. Store walls are marketing and branding vehicles, sporting large-format ads in the company's signature fonts and color schemes. Several wall segments are devoted to accessories and software.
At least one wall is devoted to the "Genius Bar," a long raised surface that looks like a chic café minus the coffee and biscotti. The Bar is staffed by certified "Mac Geniuses," all of whom have been flown out to the company's Cupertino, Calif., headquarters for training.
In another break from traditional retail, Apple charges for customer service: $99 per year for one hour a week with one of its Mac Geniuses. (Photo courtesy Apple.)
Consultations at the Genius Bar, which can be used for everything from setting up a new MacBook to learning how to sync an iPhone with iTunes, are by reservation only. Customers wanting time with a Genius need to phone ahead or make a reservation on the Web site. When they arrive, they can look at a large array of LCD screens behind the bar to see their name and their place in the queue — a high-tech, 21st century revision of the "Take a number" tags in butcher shops and DMVs.
Customers wanting more hands-on training can pony up $99 for a year's subscription to the "One to One" personal training program. Members of the service get up to one hour per week to learn from store experts on topics ranging from digital photography to podcasting and from building a Web site to making movies and music using the iLife software suite.
In a recent conference call, the company said it has approximately 387,000 members signed up for the One to One program.
Personnel, training and company culture
As impressive and attention-grabbing as Apple's products and store design are, one key element to the experience has nothing to do with hardware or software: the in-store personnel.
"Apple is able to employ quirky people who fit their own culture," Ramey said. "For the first time, it is fun to interface with someone who you hope never dates your daughter."
The bar for employment at an Apple Store is higher than most mall retail, for instance, because a "Mac Specialist" must have deep knowledge of the products. Some training is of course conducted, but Apple Store employees usually come to the relationship with an existing knowledge of the family of products and services. The bar is higher still for Geniuses; the company says in its recruiting materials that it prefers Mac certification for the position, and requires "technical guru status."
Mac people always have been specialists, though, and the narrow focus of the store's selection makes it
The power of the Apple brand, combined with expert staff, overcome the potential negatives of some store policies. (Photo courtesy Apple.)
easier for store employees to become true experts.
Barczak said it is easier for Apple employees to have great product knowledge, because most of the products in the store are Apple brands. "This is quite different from the variety of brands sold in a Best Buy or Circuit City," she said. "In these stores, it is harder for employees to have as much product knowledge about every brand and product."
Ramey said Apple Stores have some customer service policies that would be considered poor in any other setting. "They often won't touch you if you don't have an appointment," he said, and customers with damaged products under warranty are made to wait for a refurbished unit, even if a new unit is in stock. But even so, the brand power and the overall experience seems to overcome the potential negative.
Aggressive growth, aggressive competitors
Lessons Learned
from the Apple Store
What can retailers learn about store design and customer psychology from the Apple retail experience? Chris Ramey, president of luxury retail consultancy Affluent Insights and chairman of the Florida Luxury Marketing Council, suggests these five lessons:
Limit your product selection.
"You don't have to sell everything."
Make your environment educational.
Customers can spend time in an Apple Store and learn, not just buy.
Make your environment hip.
"The Genius Bar, for example — have some fun with your design and names. People want to enjoy their relationship with you."
Use excellent lighting. Proper illumination makes shoppers feel good; dim or inadequate lighting makes shoppers want to leave.
Give the products enough space.
Again, less often is more.
The company has big plans for growth for its retail division in the coming months. In an Oct. 22 earnings conference call, Peter Oppenheimer, company CFO and senior vice president, announced Apple would open 40 stores in 2008, including the first one in China, slated for Beijing in the summer.
And Apple has a lot of room to grow. According to a recent Gartner report, Apple's share of the personal computer market in the third quarter of 2007 was 8.1 percent, up from 6.2 percent in the same quarter a year prior.
Couple this with the fact that more than 50 percent of people buying Macs in an Apple Store are new to the brand, and you may be looking at some very good years ahead for the company.
"The store resonates with customers because the products resonate with customers," Barczak said. "There are some diehard Apple customers out there who only buy Apple products. The Apple Store, and the products within, enable the company to expand its customer base beyond those diehard customers."
But Ramey said Apple needs to be careful and not allow itself to believe that continued growth is assured.
"Trends come and go," he said. "There are many highly capitalized companies chasing Apple. It's easier to launch than it is to maintain."

Topics: Customer Service , Retail - Electronics , Specialty Stores , Store Design & Layout

James Bickers / James Bickers is the senior editor of Retail Customer Experience, and also manages webinars for Networld Media Group. He has more than 20 years experience as a journalist and innovative content strategist, with publication credits in national, international and regional publications.
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