Article

Has the Apple Store lost its uniqueness?

Apple's third quarter earnings dipped slightly, the first decline since 2009.

August 27, 2013

The following is an excerpt from a recent conversation on RetailWire, reproduced here with kind permission.

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," 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.

RetailWire BrainTrust comments:

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). — Lee Peterson, EVP Creative Services, WD Partners

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.

There is lots of money in retail tools that support memories. Hit "home" and "heart" to get more wallet. — Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

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. — Dick Seesel, Principal, Retailing In Focus LLC