Can Angela Ahrendts save the Apple Store?

Ex-Burberry CEO Angela Ahrendts takes over Apple retail just in time for its 13th-year anniversary May 19. Since launch the company's high street stores have become some of the most profitable shops on the planet.


No comprendez

Apple's critics as ever failed to grasp the original concept:

"I give them two years before they're turning out the lights on a very painful and expensive mistake," said David Goldstein, Channel Marketing president told Business Week.

"It's desperation time in Cupertino, Calif., as Apple is going into the retail store business to ensure that its products receive enough attention," said TheStreet.

Two years after Apple opened up, Gateway shut down its shops. Three years later CompUSA closed. Today around 50 percent of Macs sold at Apple retail go to those new to the platform, even while PC sales rapidly decline and the retail stores are among the most profitable in the world.

"It was very simple. The Mac faithful will drive to a destination, right? They’ll drive somewhere special just to do that. But people who own Windows --we want to convert them to Mac. They will not drive somewhere special. They don’t think they want a Mac. They will not take the risk of a 20-minute drive in case they don’t like it. But if we put our store in a mall or on a street that they’re walking by, and we reduce that risk from a 20-minute drive to 20 footsteps, then they’re more likely to go in because there’s really no risk. So we decided to put our stores in high-traffic locations. And it works," Steve Jobs told Fortune.

Secret sauce

They aren't profitable because they force people to buy products, but because they aim to help people achieve what they need using Apple products. That simple recipe flies in the face of how the retail industry works, but it has driven the company to open stores in 15 countries, most recently in Brazil and Turkey.

"What Apple is doing contradicts the norms in the retail industry: continuous store openings, a revolutionized approach to customer service, and even store layout. Big changes are ahead too, with a new SVP at its helm and growing presence in emerging markets," notes Retale's Kathryn Vargas. (Retale has published a map that shows the US growth of the chain).



That's not to say Ahrendts has an easy task ahead of her as she takes the helm. Apple's retail store income hit $5.227 billion in Q2 14, down 25 percent on the traditionally super-strong first quarter but flat on a year-on-year basis.

Former retail chief, John Browett, left in October 2012. In the absence of a leader Apple's retail growth has slowed. While the number of stores hit 422, revenue per store declined to $12.4 million in the last quarter from $13.1 million in Q2 2013. It seems plain the chain needs the kind of focus the ex-Burberry CEO may bring.

Ahrendts will place particular stress on driving Apple's international expansion of its store chain -- not just for sales in new territories but to drive the brand:

"Ahrendts recognized early that the nearly 100 million Chinese tourists who travel abroad each year are boosting sales in all 25 of Burberry's flagship stores, and Chinese shoppers in Burberry stores outside China spend, on average, 10 times what they spend back home," says FastCompany.

What's also clear as Apple puts together the pieces for its Next Big Thing is that with Ahrendts at the helm its retail stores will become the place to go if you want to take a look at its next foundational product releases.

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Copyright © 2014 IDG Communications, Inc.

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