Apple Store

Apple Store
Industry
Founded May 19, 2001 (2001-05-19)
Tysons Corner Center
Fairfax County, Virginia, U.S.
Founder Ron Johnson
Number of locations
Key people
Products
Parent Apple Inc.
Website www.apple.com/retail

Apple Store is a chain of retail stores owned and operated by Apple Inc. The stores sell Mac personal computers, iPhone smartphones, iPad tablet computers, iPod portable media players, Apple Watch smartwatches, Apple TV digital media players, software, and select third-party accessories.

The first Apple Stores were originally opened as two locations in May 2001 by then-CEO Steve Jobs, after years of attempting but failing store-within-a-store concepts. Seeing a need for improved retail presentation of the company's products, he began an effort in 1997 to revamp the retail program to get an improved relationship to consumers, and hired Ron Johnson in 2000. Jobs relaunched Apple's online store in 1997, and opened the first two physical stores in 2001. Despite initial media speculation that Apple would fail, its stores were highly successful, bypassing the sales numbers of competing nearby stores and within three years reached US$1 billion in annual sales, becoming the fastest retailer in history to do so. Over the years, Apple has expanded the number of retail locations and its geographical coverage, with 498 stores across 22 countries worldwide as of July 2017. Strong product sales have placed Apple among the top-tier retail stores, with sales over $16 billion globally in 2011.

In May 2016, Angela Ahrendts, Apple's current Senior Vice President of Retail, unveiled a significantly redesigned Apple Store in Union Square, San Francisco, featuring large glass doors for the entry, open spaces, and rebranded rooms. In addition to purchasing products, consumers can get advice and help from "Creative Pros" - individuals with specialized knowledge of creative arts; get product support in a tree-lined Genius Grove; and attend sessions, conferences and community events, with Ahrendts commenting that the goal is to make Apple Stores into "town squares", a place where people naturally meet up and spend time. The new design will be applied to all Apple Stores worldwide, a process that has seen stores temporarily relocate or close.

Many Apple Stores are located inside shopping malls, but Apple has built several stand-alone "flagship" stores in high-profile locations. It has been granted design patents and received architectural awards for its stores' designs and construction, specifically for its use of glass staircases and cubes. The success of Apple Stores have had significant influence over other consumer electronics retailers, who have lost traffic, control and profits due to a perceived higher quality of service and products at Apple Stores. Apple's notable brand loyalty among consumers causes long lines of hundreds of people at new Apple Store openings or product releases. Due to the popularity of the brand, there are numerous job applications, many of which from young workers. Although Apple Store employees receive above-average pay, are offered money toward education and health care, and receive product discounts, there are limited or no paths of career advancement. A May 2016 report with an anonymous retail employee highlighted a hostile work environment with harassment from customers, intense internal criticism, and a lack of significant bonuses for securing major business contracts.

Description

Apple's flagship Fifth Avenue store in New York City.

Many Apple Stores are located inside shopping malls, but Apple has built several stand-alone "flagship" stores in high-profile locations.[2] Several multi-level stores feature glass staircases,[3][4][5] and some also glass bridges.[6] The New York Times wrote in 2011 that these features were part of then-CEO Steve Jobs' extensive attention to detail,[7] and Apple received a design patent in 2002 for its glass staircase design.[8][9][10] Development of the staircases included structural engineering firm Eckersley O’Callaghan Structural Design, and architectural firm Bohlin Cywinski Jackson.[6]

Apple has received numerous architectural awards for its store designs,[11][12] and its "iconic" glass cube, designed in part by Peter Bohlin,[13][14] at Apple's Fifth Avenue store in New York City, received a separate design patent in 2014.[15][16][17]

Ron Johnson held the position of Senior Vice President of Retail Operations from 2001 until November 1, 2011.[18][19] During his tenure, it was reported that while Johnson was responsible for site selection, in-store service, and store layout, inventory was controlled by then-COO and now-CEO Tim Cook, who has a background in supply chain management.[20] In January 2012, Apple transferred retail leadership to John Browett.[21] However, after attempts to cut costs, including reducing new hires and limiting staff hours, he was fired after six months, later telling a conference that he "just didn’t fit with the way they ran the business".[22][23] In October 2013, Apple hired Angela Ahrendts from Burberry.[24][25][26]

The Apple Store at the Zorlu Center in Istanbul has a 'glass lantern' which won the 2014 IStructE Structural Awards Supreme Award for structural engineering
A spiral staircase inside the Apple Store in Boston

Work environment

Due to the popularity of the brand, applicants for jobs at Apple Stores are numerous, with many young workers applying.[27] The pace of work is high due to the popularity of the iPhone and iPad.[27] Employees typically work for only a few years as career prospects are limited with no path of advancement other than limited retail management slots.[27] Apple Store employees make above-average pay for retail employees and are offered money toward college tuitions, gym memberships, health care, 401(k) plans, product discounts, and reduced price on purchase of stock.[27] The retention rate for the technicians who man the Genius Bar is over 90%.[27][28]

A May 2016 Business Insider article featured a lengthy interview with an anonymous Apple Store retail worker in the United Kingdom, where the employee highlighted significant dissatisfactions and issues for retail workers, including harassment and death threats from customers, an intense internal criticism policy that feels "like a cult", a lack of any significant bonus if a worker manages to secure a business contract worth "hundreds of thousands", a lack of promotion opportunities, and, despite a "generous" discount on any Apple product or Apple stock, are paid so little that many workers are unable to buy products themselves.[29]

History

Third-party retail

Steve Jobs, the co-founder of Apple, returned as interim CEO in 1997. According to Jobs' biographer Walter Isaacson, Jobs began a concerted campaign to help sales by improving the retail presentation of Macintosh computers. Even with new products launched under Jobs' watch, like the iMac and the PowerBook G3 and an online store, Apple still relied heavily on big box computer and electronics stores for most of their sales. There, customers continued to deal with poorly trained and ill-maintained Mac sections that did not foster customer loyalty to Apple and did not help differentiate the Mac user-experience from Windows.[30][31] In fact, the retailer trend was towards selling their own generic in-house brand PCs which used even cheaper components than those by major PC makers, increasing retailer overall margins by keeping the manufacturing profits. This "provided a powerful profit motive to convert customers interested in buying a Mac into the owners of a new, cheaply assembled, house brand PC".[32]

Tim Cook, who joined Apple in 1998 as Senior Vice President for Worldwide Operations, announced the company would "cut some channel partners that may not be providing the buying experience [Apple expects]. We're not happy with everybody." Jobs severed Apple's ties of every big box retailer, including Sears, Best Buy, Circuit City, Computer City and Office Max to focus its retail efforts with CompUSA. Between 1997 and 2000, the number of Mac authorized resellers dropped from 20,000 to just 11,000. The majority of these were cuts made by Apple itself. Jobs proclaimed that Apple would be targeting Dell, with Cook's mandate to match or exceed Dell's lean inventories and streamlined supply chain, "with our new products and our new store and our new build-to-order, we're coming after you, buddy." While Dell had operated as a direct mail order and online order company, having pulled out of retailers to realize greater profit margins and efficiency, Apple had direct orders with sales handled by its channel partners, other mail order resellers, independent dealerships, and the new relationship with CompUSA to build "stores within a store".[32]

Jobs did a study for stand alone "store within a store" for 34 sites in Japan. These sites were designed by Eight Inc. who was designing the Apple MacWorld and product launch events with Apple. CompUSA was one of the few retailers that kept its Apple contract by agreeing to adopt Apple's "store within a store" concept designed by Eight Inc. This required that approximately 15% of each CompUSA store would be set aside for Mac hardware and software (including non-Apple products) and would play host to a part-time Apple salesperson. However the "store within a store" approach did not meet expectations, in part because the Apple section was in the lowest-traffic area of CompUSA stores. CompUSA president Jim Halpin, who proclaimed that he would make Apple products his top priority, was forced to resign a year later. Also CompUSA had trouble finding well-trained staff, as most store clerks usually steered customers away from Macs and towards Windows PCs. Despite these setbacks, CompUSA sales of Macs had increased. Apple then added Best Buy as a second authorized reseller.[33] Challenges still remained, as resellers' profit margins on selling Macs was only around 9%, and selling Macs was only worthwhile if ongoing service and support contracts were provided, of which retailer experiences were inconsistent.[34]

Online store

In 1997, the year Steve Jobs returned to Apple, Dell founder and CEO Michael Dell was asked how he would fix Apple. Dell responded: "I'd shut it down and give the money back to the shareholders". This angered Jobs, due to Dell's success with its online store originally built by NeXT, Jobs' former business that Apple acquired to bring Jobs back. A team of Apple and NeXT employees spent several months building an online store that would be better than Dell's. On November 10, 1997, Steve Jobs announced the online store at an Apple press event, and during his keynote speech, he said: "I guess what we want to tell you, Michael, is that with our new products and our new store and our new build-to-order manufacturing, we're coming after you, buddy."[35]

In August 2015, Apple revamped the online storefront, removing the dedicated "Store" tab and making the entire website a retail experience.[36][37]

Origins

Inside Apple Store at Grand Central Terminal, New York City

Jobs believed the Apple retail program needed to fundamentally change the relationship to the customer, and provide more control over the presentation of Apple products and the Apple brand message. Jobs recognized the limitations of third-party retailing and began investigating options to change the model.[2]

In 1999, Jobs personally recruited Millard Drexler, former CEO of Gap Inc., to serve on Apple's board of directors.[2][38][39] In 2000, Jobs hired Ron Johnson from Target. The retail and development teams headed by Allen Moyer from The Walt Disney Company then began a series of mock-ups for the Apple Store inside a warehouse near the company's Cupertino headquarters.[2]

On May 15, 2001, Jobs hosted a press event at Apple's first store, located at the Tysons Corner Center in Fairfax County, Virginia.[40] The store officially opened on May 19, along with another store in Glendale Galleria in Glendale, California.[40][2][41] More than 7,700 people visited Apple’s first two stores in the opening weekend, spending a total of US$599,000.[42]

Expansion

Several publications and analysts predicted the failure of Apple Stores. It was thought that because of the stores' diminutive size and non-aggressive sales team, Apple would succeed in presenting the Mac but fail in making a significant number of sales. However, the Apple retail program established its merits, bypassing the sales-per-square-foot measurement of competing nearby stores, and in 2004 reached $1 billion in annual sales, the fastest of any retailer in history. Sales continued to grow, reaching $1 billion a quarter by 2006. Then-CEO Steve Jobs said that "People haven't been willing to invest this much time and money or engineering in a store before", adding that "It's not important if the customer knows that. They just feel it. They feel something's a little different."[43] In 2011, Apple Stores in the United States had an average revenue of $473,000 for each employee.[27] According to the research firm RetailSails, the Apple Store chain ranked first among U.S. retailers in terms of sales per unit area in 2011, with sales of $3,085 per square feet, almost doubling Tiffany & Co., the second retailer on the list.[27] On a global level, all Apple Stores had a combined revenue of $16 billion.[27] Under the leadership of Ron Johnson, the former senior Vice President of Retail Operations, the Apple Stores have, according to an article in The New York Times, been responsible for "[turning] the boring computer sales floor into a sleek playroom filled with gadgets".[44]

Apple has since re-established ties with major big box retailers like Best Buy and Staples.[45] Authorized Apple resellers have a dedicated store-within-a-store section, offering a distinctive Apple-style experience to showcase products.[46] The relationship with Best Buy calls for the company to send Apple Solutions Consultants (ASCs) to train Best Buy employees to be familiar with Apple's product lineup.[31][47]

Changes

In May 2011, Apple replaced their paper cards and information displays that were placed next to products with interactive iPad 2 displays, called "Smart Signs". The new displays added more information about the product, and let customers press a button to signal needed assistance.[48] This transition from paper to touch displays was dubbed "Apple Store 2.0" by several online blogs.[49][50]

In November 2011, Apple updated its "Apple Store" iOS app to let U.S. customers use an "EasyPay" feature to buy products through their iPhone. The feature, which lets users choose the specific product model they want and gives users an option for picking up the product at a nearby Apple Store with the product in stock, aims to simplify and speed up shopping. If not immediately in stock, the feature gives users an estimated pick-up time. While inside an Apple Store, customers can also scan product barcodes to find technical specifications, ratings and reviews.[51][52]

In November 2013, 9to5Mac reported that Apple would begin using an "iBeacon" location-based notification technology. The iBeacon functionality, inside the "Apple Store" iOS app, lets consumers inside Apple Stores receive useful notifications about products, pricing and features, in an attempt to improve the shopping experience.[53] Officially confirmed by the Associated Press the following month, the feature rolled out across all of Apple's retail stores in the United States.[54][55]

In May 2014, Apple Store employees started using iPhone 5S for their handheld payments portal, rather than the previous iPod Touch devices. The upgrade lets customers buy products with RFID tags, supports credit card chips and PIN entry, and offers improved support for scanning the Wallet iOS app.[56]

In August 2015, Apple Stores replaced the dedicated Smart Signs displays next to products with new apps in the products themselves.[57]

In early April 2016, as part of an initiative to become more environmental-friendly, Apple sent an email to employees of Apple Stores that they would begin a transition process with their shopping bags, moving away from the plastic bags that customers get when they buy products in the stores, and switching to paper bags with 80% recyclable materials, with the company expecting the transition to happen on April 15. In the email, Apple also wrote that employees should first ask the customer if they want a bag, rather than giving them one without asking.[58]

In August 2016, Apple announced that it would drop the "Store" branding when referring to individual store locations, such as changing "Apple Store, The Grove" into "Apple The Grove" and "Apple Store, Mayfair" into "Apple Mayfair". The primary areas of the change happened on Apple's website and store pages.[59][60]

In July 2017, Apple added "smart home experiences" to 46 of its retail stores, letting visitors use an Apple device to control smart home appliances in the stores such as light bulbs and ceiling fans, while screens offer a look inside a virtual house that the user can control, such as lowering window shades.[61][62]

Influence

Apple Stores have considerably changed the landscape for consumer electronics retailers and influenced other technological companies to follow suit. According to The Globe and Mail, "Apple’s retail stores have taken traffic, control and profits away from Verizon as well as electronics retailers, such as Best Buy, that once looked at wireless phones as a lucrative profit source".[63] CNET has reported that the "Apple retail experience hurts Best Buy" and noted "Buy a MacBook at the Apple Store and it's hard to go back to the Best Buy Windows laptop buying experience". The publication also wrote that "Apple salespeople are generally more knowledgeable, the products themselves are generally higher quality, and the stores are more appealing, aesthetically and practically."[64]

In October 2009, reports surfaced that Steve Jobs and his retail team would help "drastically overhaul" Disney Stores. Jobs' involvement was described by The New York Times as "particularly notable", given Jobs' work on the "highly successful" Apple Stores and his election to Disney's board of directors in 2006.[65][66]

In August 2009, London Evening Standard reported that Apple's first store in the United Kingdom, at Regent Street, was the most profitable shop of its size in London, with the highest sales per square foot, taking in £60 million a year, or £2,000 per square foot.[67]

Redesign

Apple Store in Union Square, San Francisco after renovation in May 2016. Picture shows the Genius Grove.
Apple's Fifth Avenue store relocated for renovations.

In May 2016, Apple significantly redesigned its Union Square Apple Store in downtown San Francisco, adding large glass doors for the entry, open spaces with touch-sensitive tables and shelves for product displays, and rebranded rooms for the store. "The Avenue" is the central location for hardware, as well as for receiving advice from salespersons and "Creative Pros" - individuals with specialized knowledge of music, creativity, apps and photography. The "Genius Bar" becomes the "Genius Grove", a tree-lined area for help and support. "The Forum" features a large video screen and offers game nights, sessions with experts in creative arts, and community events. "The Boardroom" lets aspiring developers and entrepreneurs learn how to use their products to their full potential. "The Plaza", while limited to select locations, offers a "park-like" space outside the store featuring free 24/7 Wi-Fi access and will host live concerts on some weekends.[68][69] Designed by Jony Ive and Angela Ahrendts, the idea was to make Apple Stores into "town squares", in which people come naturally to the store as a gathering place,[70] and to "help foster human experiences that draw people out of their digital bubbles".[71] The new design will be adopted to every store Apple has,[72] and while renovation is undergoing, stores are either relocated[73] or temporarily closed.[74] For some locations, including its flagship Fifth Avenue store in New York City, the redesign means substantial expansion of space,[75][76] requiring dismantling, and possibly reworking, of its physical properties.[77]

In April 2017, Apple announced that its "Today at Apple" educational sessions, which launched with its Union Square redesign in 2016 and offer more than 60 free hands-on sessions for creative skills, will also be expanded to all of its stores.[78][79]

Genius Bar

The Genius Bar at Apple Store Regent Street, London

All Apple Stores feature a Genius Bar, where customers can receive technical advice or set up service and repair for their products. The Genius Bar provides software support for MacOS and hardware service on products that are not classified vintage or obsolete.[80] However, in most cases the Geniuses will at least attempt to assist customers with older hardware.[81] Originally, visitors to the Genius Bar were offered free Evian water. Apple dropped this amenity in February 2002.

Many new stores feature a station called The Studio, a Genius Bar-like setting where customers can meet with a "Creative" and receive help with projects ranging from organizing a photo album to music composition to film editing. Some of the older stores are being considered to carry a Studio in a future remodel, in some cases replacing the older theaters. The largest Genius Bar in the world is located in Amsterdam.

Store openings

Apple Store openings and new product releases can draw crowds of hundreds, with some waiting in line as much as a day before the opening.[82][83][84][85] The opening of New York City's Fifth Avenue "Cube" store in 2006 became the setting of a marriage proposal, and had visitors from Europe who flew in for the event.[86] In June 2017, a newlywed couple took their wedding photos inside the then-recently opened Orchard Road Apple Store in Singapore.[87][88]

Geographical expansion

The first two Apple Stores opened in the United States in 2001.[40] In 2003, Apple expanded its operations into Japan, opening the first store outside of the United States.[89] This was followed by the opening of a store in the United Kingdom in November 2004.[90] In 2008, Apple opened its first store in China,[91] and in 2014 announced a major further expansion into the country, with a goal of 40 stores within 2016,[92][93] a goal it reached.[94] The first Apple Store in Hong Kong opened in September 2011,[95] followed by Turkey in April 2014,[96][97] Belgium in September 2015,[98][99] and the United Arab Emirates in October 2015.[100] Apple has also expanded the number of stores in New York City, opening the tenth store in August 2016.[101][102] The first store in Singapore opened in May 2017,[103] and the first store in Taiwan in July 2017.[104][105]

Burglaries

Apple Stores have experienced numerous burglaries. Notable incidents include two burglaries in February–March 2016 where thieves stole a combined number of 67 iPhones for a combined sum of more than $49,300,[106] a June 2016 event where a thief dressed as an Apple Store employee gained access to the electronics repair room and grabbed 19 iPhones worth $16,130,[107][108] a November 2016 incident where an Apple Store was robbed of $40,000 worth of items and then attacked again in April 2017 for $24,000 worth of goods,[109][110] a speedy December 2016 robbery that took 12 seconds to complete,[111][112] and another December 2016 attack where multiple individuals drove a car into a store through the front glass door and proceeded to steal an unspecified number of displayed items.[113][114]

The devices on display in stores are equipped with special demo versions of their respective operating systems. iOS devices prevent passcodes from being enabled and Mac computers revert to original state after a reboot. Additionally, in case of theft, a security measure renders devices useless, by activating a "kill switch" disabling them once out-of-reach of the store's Wi-Fi network.[115]

Apple Company Store

Exterior of the Apple Campus store on Infinite Loop.
Interior view of the Apple Campus store showing Apple-branded shirts.

In 1993, Apple opened a store at its Apple Campus in Cupertino, California. The store is the only place in the world where Apple merchandise can be purchased, including T-shirts, mugs, and pens.[116] In June 2015, the store was closed for renovations,[117] and in September it was reopened, offering a new design and, for the first time, selling iPhones, a notable product omission from years past.[118][116][119]

Imitations

An unauthorized Apple Store in Tehran, Iran

In July 2011, an American expatriate blogger who lives in the southwestern Chinese city of Kunming reported on her discovery of what she called "the best ripoff store we had ever seen"—a fake Apple Store, complete with the glass exterior, wood display tables, winding staircase and large promotional posters found in legitimate Apple Stores, and with employees wearing lanyards and the same T-shirts as actual Apple Store employees.[120] The Wall Street Journal reported that the store had "gotten widespread international attention for the remarkable lengths to which its proprietors seem to have gone to mimic the look and feel of a real Apple Store."[121] The fake Apple Store was mentioned by U.S. presidential contender Mitt Romney in the second 2012 election debate.[122] Chinese law prohibits retailers from copying the look and feel of competitors' stores, but enforcement is lax.[123]

According to The Wall Street Journal, unauthorized Apple resellers are found throughout China; the blogger's original post noted that two such stores were located within walking distance of the first knockoff, one of them with a misspelled sign reading "Apple Stoer".[121] An employee of the first knockoff confirmed that the store was not one of the 13[123] authorized Apple resellers in Kunming.[120][121] In a follow-up report, Reuters indicated that local authorities in Kunming had closed two fake Apple Stores in that city due to lack of official business permits, but allowed three other such stores to stay open, including the one that had attracted international attention.[123] The operators of that store had applied for a reseller license from Apple.[123] At the time of the report, only four legitimate Apple Stores had opened in China, with two in Beijing and two in Shanghai.[121]

Following these events, more real Apple Stores in China began opening, an early one being the Shenzhen Apple Store on November 3, 2012.[124]

See also

References

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