Will Apple turn its stores into something more than stores?

Discussion
Photo: RetailWire
Oct 19, 2016

If its true that consumers today are more into experiences than simply buying products off of shelves, than Apple may be onto something with its new generation design focused on transforming its locations into something akin to “town squares.”

Angela Ahrendts, Apple’s senior vice president of retail, told attendees at Fortune’s Most Powerful Women Summit that the company’s new generation of stores is more about enriching the lives of its customers than simply selling them things.

Ms. Ahrendts, as reported by MacRumors, told attendees that Apple’s mission goes beyond simply generating ever-greater profits. “The bigger the company, the bigger the obligation,” she told attendees, going on to explain her vision of Apple’s retail locations serving as places for education and community.

The new stores, as reported by Fortune, will hold what Ms. Ahrendts called “Teacher Tuesdays” to help educators discover ways they may more effectively bring technology into classrooms. The stores will also conduct three “how to code” sessions daily for kids, parents and teachers. Apple already offers summer tech camps at its locations.

Creative pros will also be available to help customers learn how to perform tasks, such as taking better photos using their iPhones. These associates serve a function beyond Apple’s Genuises who are on hand to help customers with products in need of repair.

By the end of the year, 95 of Apple’s stores nearly 500 stores will be remodeled to reflect the company’s new vision for its retail business. Among the new community features of the new stores is Apple’s plan to recruit artists, musicians and others to “bring people out of their digital bubbles,” according to MacRumors.

Apple’s new approach to its stores is apparently playing well with its staff. Ms. Ahrendts reported that the company’s retail business has an 87 percent retention rate, well above the average for all retail.

DISCUSSION QUESTIONS: How viable is Apple’s goal of turning its stores into town squares? How will the changes Apple is making affect its store performance and its overall business?

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18 Comments on "Will Apple turn its stores into something more than stores?"


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Ian Percy
BrainTrust

Like Starbucks and Panera Bread, I thought Apple stores were already mini town squares.

Another good article from George that has me wondering what other retail operations lend themselves to this model of being a gathering place. Not many I suspect. Hard to imagine that happening in a Walmart or Target.

The other advantage for Apple town squares is that a purchase generated by being part of the community is darn profitable. Contrast that to the tables for four at Starbucks and Panera Bread that are occupied for hours by a single person who spent under $3 to be there. That’s all those squatters will ever spend — and that can’t be good for the bottom line.

Chris Petersen, PhD.
Guest

My question would be … aren’t Apple stores already “town squares” in many respects?

I recently visited Apple Covent Garden in the UK. As with many premier Apple locations, this is an upscale, high-traffic area. The store has four floors and they were all PACKED! You had to wait in line just to be able to see an associate! It was the essence of where to meet, greet and hang out for Millennials.

The future belongs to those that create it. In many ways Apple reinvented the concept of a store. And in the process, their stores generate more revenue per square foot than any other retailer.

There will be an interesting question of balancing the “town square outreach mission” with the fundamental need to sell things to fund the space. However, in the world of omnichannel, sales do not have to take place in the physical space formally called a store. The customer is now the point of sale. So Apple may again be on the cutting edge of thinking required for omnichannel success.

Bob Amster
BrainTrust

A number of us appear to share similar opinions of what an Apple store already is today …

Bob Amster
BrainTrust

I am sort of an Apple loyalist so my opinion may be biased. If one looks at any Apple store, one can see that each one is a like a beehive of activity. I believe that Angela Ahrendts or someone on her team observed that the stores are already a sort of Apple community magnet or town squares, and the transition to something more community-inclusive was not far away and was not formalized. Following typical Apple innovative thinking, and realizing that physical stores need to be attractive centers, Apple decided to try out the town square model. It will work.

Mark Ryski
BrainTrust

I think it’s important to realize that Apple doesn’t rely on its retail operation to drive the company’s enormous revenue or profit. This enables Apple’s retail operation to evolve its store concept in ways that very few, if any, other retailers practically can. Apple stores were revolutionary from the start, thanks largely to Steve Jobs’ vision, and Ms. Ahrendts’ town square concept is a continuation of the evolution. Apple stores have never been strictly about retailing in the traditional sense, but rather a physical extension of their ubiquitous brand. It’s hard to say how this new concept will affect store performance, but what we likely can say is the way Apple measures store performance is probably very different than most retailers — I don’t think same-store sales is at the top of the list.

Adrian Weidmann
BrainTrust

This strategy is a natural progression of the Apple community. As these technologies continue to evolve to include more artificial intelligence the focus is on how these capabilities can help you in your daily lives and enhance your experiences using these technologies. The shift in focus from the technologies to the experiences they create and/or enhance will translate to sales to a broader audience. Look at the success of GoPro cameras. Little mention is ever made about the virtues of the technology — it’s all about simply capturing and sharing experiences. Providing expert insights and guidance from experts in various fields as to how to best use Apple technology will be very successful and well received.

Gene Detroyer
BrainTrust

Apple stores were never stores. They were always something more. Apple was one of the first retailers to recognize that a store isn’t just a place to sell merchandise. These plans are no more than an extension of what has already been implemented. And all retailers should look at it carefully. This is the future of brick-and-mortar retailing.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
5 years 8 months ago

The heart and soul of an Apple store are its products and the high quality help you’ve been able to get with products. I fear for Apple is losing their way — wandering away from what’s worked.

The alarm bells are especially loud with the last idea of bringing people out of their digital bubbles. Tricks like this won’t bring back magic lost in their products. My advice to Apple would be to focus on what has made them great: being a gathering place that is all about great products.

This concern is heightened by my own shopping experiences. In the past six months I’ve found floor employees at the store beginning to be irritatingly pushy about upsells — what appears to be corporate direction. They are on the edge of a great danger — claiming to seek a higher consumer purpose while taking a backward step into hard-sell tactics.

Ian Percy
BrainTrust

Doug, you give us a good reminder that EVERYTHING in existence — human-made or not — is on an inescapable life-cycle. There’s birth, growth, maturity and then you die. (I used to be a motivational speaker.) Our tendency in business is to think that a successful “maturity” stage will live forever. It won’t. At the front edge of maturing, even in the growth stage, is the time to reinvent. Thanks for this insight.

Shep Hyken
BrainTrust

Apple continues to push the envelope. Love it! This next move will get them closer to the community. A large company that can do “local” well has an advantage. Assuming they are bringing in local artists, musicians, etc. Apple will gain a stronger presence as a company that supports the local community.

Lee Kent
Guest

I do love the concept of creating an experience that would be a destination for the consumer, however Apple products are not something that you buy every day. If they plan to have artists or photographers to teach us how to take a better photo then they also need something that one may purchase — that is not another $800 phone.

It’s one thing to show you are a loyal to a brand but quite another to take up space at the store and buy nothing.

Just sayin’ for my 2 cents.

Mohamed Amer, PhD
BrainTrust
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
5 years 8 months ago

Apple is in an enviable position to experiment on terms that others can simply not afford. A few years ago I authored a blog recognizing the uniqueness of Apple’s retail stores. Today, the company continues to redefine and reinvent the notion of a retail store. It’s highly remarkable for a brand to excel at designing (creative), engineering products (rational) and in connecting so well with consumers (emotional).

By designing the “selling” as secondary to providing space to build communities, Apple will actually increase store sales and product adoption. By redefining the retail experience into terms that transcend the transactional the brand is creating deeper and lasting bonds with consumers.

Although success is not guaranteed, the concept and strategy are brilliant in enhancing and differentiating the brand experience.

Lee Peterson
BrainTrust

To me, they already are! In any mall/street, whatever, wherever they are, they’re the most crowded store. I go in just to watch people or look at new stuff, not to buy, and it seems like everyone else is too. Fun to talk to the staff about new stuff coming out as well. So, add in genius bar, and maybe a band/presenter or two occasionally, and they’re there. As we used to say, there’s definitely a “there there.” It’s a no-brainer.

Ken Morris
BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
5 years 8 months ago

Apple has done a phenomenal job of changing the role of the store to appeal to new consumer interests. What is more amazing is that they aren’t waiting for customers to ask or demand a different customer experience, they are anticipating and shaping new customer expectations.

The town square approach is essentially making the current community center mindset more formal. I don’t think the “town square” terminology or store layout will dramatically change consumers’ perception of Apple, as consumers are already flocking to Apple store for the experience and education that are a part of Apple’s DNA.

We are seeing this concept of the “theater of shopping” become a bigger focus for retailers as they realize how important this is to customers. Further evidence is the move by pure play online retailers to open physical stores. Contrary to some peoples’ prediction that stores are dying, the store is still extremely important to shoppers. Time to go shopping!

Adam Silverman
Guest

The only way this works is if they (and other retailers who go down this path) change the antiquated store metrics such as traffic, comp sales, and sales/sq. ft. These metrics are from a bygone era where stores operated as a single channel. Store metrics need to evolve in order to support this shift in retail store strategy — you cannot do one without the other. Financial success must be measured over a longer period of time, and must include the influence of a store on total sales in all channels.

Naomi K. Shapiro
Guest

Brilliant idea. Natural evolution. Apple leads. Apple rocks! Now, two caveats: I have always had a problem fighting the crowds for my appointments and waiting to get taken at my turn, and then, someone at my right or left is getting help from the same associate simultaneously. I wish Apple could make this a more pleasant, INDIVIDUAL experience among the masses of acolytes. Two, this concept is only good as long as it is used for GOOD, and beware of any agendas — political, etc. — it’s a lot of power and influence on a crowd that thinks Apple can do no wrong.

Kenneth Leung
BrainTrust

Apple store has never been just about shopping, it is about the brand experience and product support plus upsell and cross selling. Given the traffic volume to Apple store rivals amusement parks, the town square concept is a natural extension to the broad Apple ownership experience. Gives them a lot of equity to work with when the product doesn’t exactly work right (such as quirks with the latest IOS upgrade).

Shilpa Rao
Guest

It was about time that Apple Stores had to be re-engerzied to keep the traffic flowing and nothing better than lessons on taking the best selfies for the Millennials and Gen Y. Apple stores have to transform from being product stores to more service and learning stores, and they have to constantly keep innovating to keep the fun going on in the stores!

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