Angela Ahrendts, Senior Vice President of Retail at Apple Inc.
As I write this, Apple have announced a market capital valuation of US$1 trillion. Perhaps to put that into perspective, it’s circa four times the entire turnover in the Australian retail sector across all channels (allowing for the exchange rate).
Amazon have coincidentally grown their market cap to US$850 billion, Walmart looms a distant third at circa US$300 billion.
However, as Ulta Beauty CEO Mary Dillon says, “Until Amazon creates a drone that can cut your hair, there’s a physical and real reason to come to the store.”
In this commentary, I will concentrate on the vision and legacy of Apple retail as a showcase for critical success factors, with appreciation to the retail leaders quoted.
What is it that we have learnt from Apple as retailers and what has made them so innovative as retailers? And why do many retailers try to copy Apple in their shop designs yet fall short in the actual implementation?
Most retailers get the interior layout, design, fixtures copied easily enough, lighting, even general ambience, however seem to fall short on the “X” factor.
There are, in our view, two key X factors behind the success of the ‘Apple cathedrals’ that are worthy of mention.
Apple educates their audience and this is a very important opening distinction. As the online ratio of retail sales increases, the physical space cannot just be predominately about putting products on shelves, the space must also be used for customers to experience the offer – be educated, inspired and take a learning experience from the environment. By way of example, one of our clients is a woodworking tool retail business now teaching their customers “how to” build objects with the tools they purchase from the retail shop.
As online retail grows, retailers that can educate, inspire, and create human experiences will win. It’s not about informing customers per se, it’s about leaving customers with more than a product price transaction. It is something inherently in the DNA of the brand that permeates far more in the consumer psyche.
From learning about tea to after hours classes, to running and cycling clubs starting at the store – whatever the winning retailer formula for customer immersing experience – it’s their X factor.
As Rachel Shechtman, founder of Story says, “There is a solid chance that you can be using square footage more productively… We don’t need another retailer selling jeans and black pants, unless they bring a point of view and an experience that no one else has.”
Linked closely to the first point is that Apple builds a community, or tribe, in all their endeavours across all the channels. I say “tribe” very deliberately as the connotation of tribe is very important
“A social division in a traditional society consisting of families or communities linked by social, economic, religious, or blood ties, with a common culture and dialect”.
Creating a tribe is an emotional connection to a cause – from Lorna Jane’s ‘Move, Nourish Believe’, to being a ‘Patagonian’ or a ‘Harley Hog’.
There is also heritage, a brand story, typically a personality who founded the organisation – an innovator and pioneer that represents the face of the company. Think Steve Jobs.
A cause that links to a future, a social collectivism helps a brand establish itself as meaningful to the lives of its customers – Apple does this extremely well with brand associations of innovation, community, connection – all speak to a tribal approach
“Our CEO Charles Bergh often talks about how Levi’s needs to have one foot rooted at the heritage of the past to make sure we understand where we came from, and one confident step forward in terms of driving innovation forward,” says James ‘JC’ Curleigh, Levi’s brand president.
Meanwhile, Mickey Drexler says, “People like consistency. Whether it’s a store or a restaurant, they want to come in and see what you are famous for.”
Retailers like Apple are part of consumers’ life. Not an appendage but rather part of the ritual patterns of everyday living focusing on service – good old fashioned customer service.
Staff appear to be an investment rather than an expense to the business, focusing on staff as the disseminators of content, spreading the gospel if you like.
What motivates high performance teams ? Winning individually and collectively with purpose, buying into the vision and solving customer problems or ambitions.
At this moment, culture does eat strategy for breakfast as they say and important consideration for retailers is to consider that replicable models like this only work with a replicable high performance culture.,
“I was reading all these reports that were down on retail brick and mortar, saying it’s all about online…I think brick-and-mortar is an amazing opportunity to use our stores and our store staff as a vehicle to truly engage with the community in a way no other retailers are doing,” says Jim Brett, president, West Elm.
And in the words of Ron Johnson, former senior VP of retail at Apple, “Their [staff] job is to figure out what you need and help you get it, even if it’s a product Apple doesn’t carry. Compare that with other retailers where the emphasis is on cross-selling and upselling and, basically, encouraging customers to buy more, even if they don’t want or need it. That doesn’t enrich their lives, and it doesn’t deepen the retailer’s relationship with them. It just makes their wallets lighter.”
Much has been written about Apple the retailer and more will be. A game changer at every level of society and leaving we retailers a trillion reasons currently as to why they got it ahead of the curve.
(With thanks to Vend’s Francesca Nicasio and her collation of great retail quotes).
Brian Walker is founder and CEO of Retail Doctor Group, a retail advisory and consultancy group and the Australian elected member of the global retail expert’s alliance Ebeltoft Group.