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Ron Johnson 'reimagined everything' when creating the Apple Store

post #1 of 30
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Former Apple retail chief Ron Johnson says that the success he created with brick-and-mortar Apple Stores is based on a complete reworking of the traditional retail culture, built on customer relations and hands-on management.

As part of an interview featured in the December 2011 issue of the Harvard Business Review, Johnson made a special guest posting on the magazine's blog outlining the operating model he used to make the Apple Store one of the most profitable retail spaces in the world.

When asked how he made Apple's brick-and-mortar outlets so successful in a time when internet sales continue to grow, Johnson said that the two models are interrelated and in fact work together if structured correctly.

"In reality, whatÂs growing is physical retailers extension into a multiÂ*channel world," Johnson said. "ItÂs not as though thereÂs a physical retail world and an online retail world, and as one grows, the other declines. TheyÂre increasingly integrated."

The former senior vice president of retail at Apple and current CEO of JC Penney said that a store needs to enrich the lives of its customers, explaining that if it just fulfills specific product needs it doesn't create new types of product value.

Johnson notes that there is a difference between transacting and actually adding value beyond merchandise, which is how he modeled the Apple Store where products played a secondary role to an overall retail experience.

"You have to create a store that's more than a store to people," Johnson said. "People come to the Apple Store for the experience  and they're willing to pay a premium for that."

A number of components go into making a store with a culture that Johnson describes as a complete re-imagining of the traditional model. For Apple, this meant hands-on "try before you buy" device sampling, quick turnaround on repairs and personal training for purchased products, which Johnson introduced with the Genius Bar.

Johnson notes that the most important component to the Apple Store experience is the staff, and that a network of well trained employees not working on commission is integral in creating an environment where customers' needs come first. He claims to have reinvented the sales associates' job, saying that a tech store's staff shouldn't prioritize the sale.

"[The sales associates] have one job: to help you find the product thatÂs right for you, even if itÂs not an Apple product," Johnson writes. "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."

Ron Johnson opens a Chicago Apple Store

In order for the retail strategy to work, Johnson and former Apple co-founder Steve Jobs agreed that complete hands-on focus was needed, with the retail chief taking sole responsibility for retail operations. To that end Johnson personally interviewed every manager who ever worked in an Apple store and was involved in the design of every retail space Apple built before he left the company in November.

"Every employee at an Apple Store knows someone well who knows me well," Johnson said.

To become an employee, a candidate has to pass through a rigorous process of six to eight interviews, including a sit-down with the person running the entire local market. The process is a type of initiation, and those who make it through are said to feel honored to be "on the team."

"I donÂt know if IÂm a great selector, but IÂm a great connector," Johnson said. "The people I hire trust me because of this personal connection. You also need a clear vision of what kind of people you want."

Every decade one or two retailers profoundly change the industry landscape; in the 1980s it was Walmart and in the 90s the Gap reinvented the specialty store. Since 2000, Johnson argues that Amazon has lead the charge in e-commerce while Apple has influenced the in-store customer experience.

Ron Johnson at NYC Apple Store opening | Source: Fortune

In summarizing his insights into what makes a retail store successful, Johnson likens the process to the problems Jobs faced when conceptualizing the iPhone.

"[Jobs] didn't ask, 'How do we build a phone that can achieve a two percent market share?' He asked, 'How do we reinvent the telephone?'" Johnson writes. "In the same way, retailers shouldn't be asking, 'How do we create a store that's going to do $15 million a year?' They should be asking, 'How do we reinvent the store to enrich our customers' lives?'"
post #2 of 30
Yes, yes, and yes. I love the way things seem so obvious when they are right.
post #3 of 30
Quote:
Originally Posted by paxman View Post

Yes, yes, and yes. I love the way things seem so obvious when they are right.

I agree with you, and think Ron did a great job, sorry to see him leave Apple. I can see how he wanted a shot to be a CEO, so I don't hold it against him. In fact, I wish him good luck. I am glad he pushed for the Genius Bar, it was genius. However I doubt Ron would have been as successful in creating Apple's retail experience, if Apple didn't have great products to put in the stores.
post #4 of 30
This should be interesting, since JC Penny controls which products get into its stores, but not the products themselves.
Quote:
Originally Posted by AppleInsider View Post

Johnson argues that Amazon has lead the charge in e-commerce...

Oh, I doubt that, but he might have said Amazon has led the charge.
post #5 of 30
Sad he is out of Apple. I see the stores deteriorating just a little already. (I was followed by the security guard as I wandered around the store. Never felt that before... decided to not purchase the $30 rubber band after that.)

It's a delicate balance they need to maintain.

As for JCP... boy, that is going to be some work. Their stores are really a mess on many levels.
post #6 of 30
I agree, I haven't shopped at a JC Penny's in many years.

Quote:
Originally Posted by aaarrrgggh View Post

As for JCP... boy, that is going to be some work. Their stores are really a mess on many levels.
post #7 of 30
Quote:
Originally Posted by aaarrrgggh View Post

I see the stores deteriorating just a little already. (I was followed by the security guard as I wandered around the store.

And because of that one instance you surmise that the feel of the stores is deteriorating? Maybe it was the way your "wandering" came across to the security guard. He was just doing his job, especially if the Apple Store was in a mall setting.
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post #8 of 30
Apple Store need

1. More configuration options in-store. Adding a larger HDD shouldn't result in the need for BTO.

2. A more clear layout. Since the stores change so much you often don't what area some accessories have be re-assigned

3. More personal interaction with customer. Unless I come into a store multiple times the employees don't know who I am nor my history. This info opt in or course.

4. More self service options with repair. If my Apple product is in the process of repair I should be able to login to a site and be updated on the process as it goes along. If I have to pick up the phone and call to find out the process has failed in many cases

5. Tiered pricing. Frequent shoppers should enjoy perks and other benefits for support Apple stores.
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post #9 of 30
Instead of
Quote:
Originally Posted by AppleInsider View Post

In order for the retail strategy to work, Johnson and former Apple co-founder Steve Jobs agreed that complete hands-on focus was needed, with the retail chief taking sole responsibility for the stores.

I assume you meant:

In order for the retail strategy to work, Johnson and Apple co-founder, the late Steve Jobs, agreed that complete hands-on focus was needed, with the retail chief taking sole responsibility for the stores.
post #10 of 30
While I think he did do a good job. I think there is a little TOO much arrogance by saying the product was irrelevent to the stores success. The stores gave exposure to other apple products from the same guys who's genius was behind the ipad. They also saw their biggest boom right after the iphone following the ipads success. This is no cooincidence. The stores owe some of their success to the products despite what this guy says. The iphone and after that the ipad were the hot items to have and still are. Items like these make people go "what else does apple have for me to look at". Apple stores having the same logo as the products that are essencially must haves for this generation is a huge point to the success of the stores and this guy is gonna come off his high horse when he realizes JC penny stories are not apple stores.
post #11 of 30
Quote:
Originally Posted by hmurchison View Post

Apple Store need

1. More configuration options in-store. Adding a larger HDD shouldn't result in the need for BTO.

This would be nice, but I don't think it is too important (and might be a negative for some). Like the guy said, the online sales and in store sales complement each other. For people who know what they want in detail, there is Apple.com. Easy to get exactly what you want.
For people who don't know what they want, they can get some hand holding at the store--and too many choices might take away from the comfort of their experience. (I saw an older couple looking to buy a laptop for a daughter or granddaughter and they had it narrowed to 2 of the [admittedly] limited choices and they almost brought themselves, and the Apple associate, to tears. You want to make them pick HDD sizes too?)

Quote:
2. A more clear layout. Since the stores change so much you often don't what area some accessories have be re-assigned

I usually end up at a mall store--they are small enough that it doesn't take long to find anything. This might be more of a problem at a flagship, I guess.
Quote:
3. More personal interaction with customer. Unless I come into a store multiple times the employees don't know who I am nor my history. This info opt in or course.

What? Even the smallest Apple stores have dozens of employees. Unless you are some sort of major purchaser buying dozens of computers a year, I can't see how you would expect a special relationship (and if you are, why are you buying in person at a store?).

Quote:
4. More self service options with repair. If my Apple product is in the process of repair I should be able to login to a site and be updated on the process as it goes along. If I have to pick up the phone and call to find out the process has failed in many cases

Quote:
5. Tiered pricing. Frequent shoppers should enjoy perks and other benefits for support Apple stores.

What? This is not a store issue, but a general Apple issue.
But it seems that your main complaint is that you want to feel Extra Special when you walk into an Apple Store. Is this really your complaint?
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post #12 of 30
No Macbook Pro comes standard with a SSD so the minute you want performance you have to BTO the MBP and wait up to 4 days. Buzz kill. An Apple Store isn't like the old Gateway Country stores where they had product for display but no warehouse or service center. It's odd you cannot do more configurations in store. It's no big deal unless you actually wanted to take your computer home that day with the configuration like you want it. But hell....it's "only" the customer.

Agreed...the clarity of the store only really takes a couple of visits and then you've pretty much got the store down unless it's a flagship. I really didn't want the tacky Best Buy type of "Computer Section Here" placards. LOL

Personal connection


Grand opportunity to leverage the Apple ID or iCloud account for more history behind a customer. After a few years few Mac users know exactly what computer they have. For the life of me I don't understand why I can't just walk into a Starbucks or other other frequently populated chain and have my data available or my favorite drinks or whatnot. People hate explaining themselves to multiple people.


I wouldn't say I'm complaining but rather pointing out my vision for what re-architected retail looks like to me within the context of a high technology company. I don't view Apple stores as being successful because they've cracked the nut of retail but rather because they do things that other companies cannot afford to do like

clad their stores in expensive desks and aluminum.
give free Genius Bar appointments
offer workshops and individual training .

If other retail stores did this with popular products they'd have high traffic too.
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post #13 of 30
Quote:
Originally Posted by hmurchison View Post

I wouldn't say I'm complaining but rather pointing out my vision for what re-architected retail looks like to me within the context of a high technology company.

Hey, sorry if I missed your point and came on too strong. It's been a long day...

I do like your vision: you walk into an Apple Store and your iPhone notifies them that you are there and gives them a summary of your Apple devices and repair history so they can greet you appropriately...
I felt like I got some of this when I brought my new iPhone in with a cracked screen last summer. They were not overly enthusiastic about my chances of getting help but when they came back after running my name (and I assume seeing several recent MacBook Pros and iPhones and few warrantee claims) they were all sweetness and full of help...
Maybe I agree with you more than I thought...
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post #14 of 30
Quote:
Originally Posted by aaarrrgggh View Post

I see the stores deteriorating just a little already. (I was followed by the security guard as I wandered around the store. Never felt that before... decided to not purchase the $30 rubber band after that.)

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post #15 of 30
Quote:
Originally Posted by Bageljoey View Post

Hey, sorry if I missed your point and came on too strong. It's been a long day...

I do like your vision: you walk into an Apple Store and your iPhone notifies them that you are there and gives them a summary of your Apple devices and repair history so they can greet you appropriately...
I felt like I got some of this when I brought my new iPhone in with a cracked screen last summer. They were not overly enthusiastic about my chances of getting help but when they came back after running my name (and I assume seeing several recent MacBook Pros and iPhones and few warrantee claims) they were all sweetness and full of help...
Maybe I agree with you more than I thought...

You were fine friend. Your experiences mirror what I've heared. Mac experience and loyalty can swing some things in your favor. With the growing importance of the Apple ID I could certainly see vastly improved customer service so long as privacy is still respected.
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post #16 of 30
Quote:
Originally Posted by Dickprinter View Post

And because of that one instance you surmise that the feel of the stores is deteriorating? Maybe it was the way your "wandering" came across to the security guard. He was just doing his job, especially if the Apple Store was in a mall setting.

There's a fine line between security and suffocation. Part of the Apple Store experience is to never feel rushed or hovered over. I went to the Apple Store a few days ago and spent 45 minutes playing on MacBook Airs, iPads, iPhones, and accessories. The specialists asked if I need help and left me alone when I said no. Simple as that
post #17 of 30
Quote:
Originally Posted by hmurchison View Post

Apple Store need

1. More configuration options in-store. Adding a larger HDD shouldn't result in the need for BTO.

I imagine that there are simply too many permutations of each product line to be physically held at each store. Holding every possible combination means wasted stock (the enemy of Tim Cook). It's more efficient to have only a few configurations of each thing and many units of that configuration.

If people feel that they want to tweak it, it's quite simple to order on Apple.com. Especially if you're a techie who knows they want the 500 GB version with the extra stick of RAM, going online is quite easy. If you need help figuring out the difference between the MacBook Air and the MacBook Pro, going to the store is probably better and you probably don't care as much about GHz anyway...
post #18 of 30
Methinks Mr. Johnson is not shy about taking most of the credit for the success of Apple retail.
post #19 of 30
Quote:
Originally Posted by stelligent View Post

Methinks Mr. Johnson is not shy about taking most of the credit for the success of Apple retail.

So what?

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post #20 of 30
Quote:
Originally Posted by aaarrrgggh View Post

Sad he is out of Apple. I see the stores deteriorating just a little already. (I was followed by the security guard as I wandered around the store. Never felt that before... decided to not purchase the $30 rubber band after that.)

It's a delicate balance they need to maintain.

As for JCP... boy, that is going to be some work. Their stores are really a mess on many levels.

They aren't deteriorating due to Ron leaving - security guards have been in place in a number of Apple Stores since the beginning of this year at least. A necessary evil when you have as many people in an Apple Store as you do - which increases vulnerability to "shrink", or shoplifting items. This has been a problem for them since they built out their wide mainstream consumer interest in Apple products. Same thing with credit card fraud and break-ins.

Our Apple Stores here get inundated with teens on weekends hitting the malls and stopping by the Apple store to take photobooth pictures and post them up to FB or shoot videos and throw them up to Youtube. You can't get close to product on the tables when that happens.

Damn popularity! Ohhh for the good old days when just a few of us were into Apple products and we could wander the Apple Stores unfettered by security and masses of other people admiring or trying out the products and getting in our way!

It's certanly NOT Ron Johnson's departure causing that, anymore than it was Job's untimely departure causing Apple to bring out an iPhone 4S instead of a 5.
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post #21 of 30
Ron did rewrite the retail playbook. Apple Stores were such a refreshing change: visually pleasing, plenty of space, easy to get assistance, knowledgeable help, free bottle water at the Genius Bar, everything on display actually working properly, good vibe, etc.

Some of those elements have changed. Still cool, visually pleasing with a good vibe. But with success have come crowds. With crowds have come less space to move, fewer employees per customer, some employees lack depth of knowledge and experience, refresh of furnishings takes longer with shabbiness beginning to creep in, and the free water is long gone.

In short, the Apple Store experience is not as special as it once was. Its success is now more because of the demand for the product it sells and less because of the store itself.

Hope they care and are taking steps to recapture the experience of the original, even with the challenges that success has brought.
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post #22 of 30
Quote:
Originally Posted by hmurchison View Post

Apple Store need

1. More configuration options in-store. Adding a larger HDD shouldn't result in the need for BTO.

2. A more clear layout. Since the stores change so much you often don't what area some accessories have be re-assigned

3. More personal interaction with customer. Unless I come into a store multiple times the employees don't know who I am nor my history. This info opt in or course.

4. More self service options with repair. If my Apple product is in the process of repair I should be able to login to a site and be updated on the process as it goes along. If I have to pick up the phone and call to find out the process has failed in many cases

5. Tiered pricing. Frequent shoppers should enjoy perks and other benefits for support Apple stores.

SO let's look at this - because I think you have some good ideas here.

1. More configuration options in store. So from a practical perspective, this would ostensibly require a large amount of product overhead at each store to cover the different sizes of HDDs for desktop and laptop, which becomes an inventory and space management logistics issue. Anytime you add custom configuration to a brick and mortar model you have to add in the logistical challenges that that option represents. Which means higher operating costs as well, since you have to stock enough HDDs to have inventory at all 358 stores world-wide.

2. More clear layout. I guess I'm confused by this one. It really doesn't get much clearer than it is - the Accessories areas are tucked in the back two sections in most Apple Stores. Compared to most other retail operations it doesn't get much simpler than that. The only issue is looking to see which side has which accessories - I do that by walking into the middle of the back section and looking at the products offered on either side - that pretty much tells me where things are.

3. More personal interaction. Like the idea, but I'm already satisifed that an Apple Specialist seems willing to take whatever time it takes to answer my questions or trade stories. I get the same treatment no matter what Apple Store I've gone into. Can you elaborate a bit on this?

4. More self-service options on repair. Checking status is fun, true. I on the other hand just want the darn thing fixed and I don't care where they are in the process, as long as the work gets done right. I get a quick phone call if there is a delay in getting a part, and when it's ready for pick-up. I frankly don't obsess about what they are doing moment by moment. Anymore than I obssess when my mechanic works on my car. I have an excellent mechanic and I leave him to do what he does best in the way he chooses to do it. Different strokes for different folks I guess!

5. Tiered pricing/frequent buyers advantage. Hmmm. Like the concept, but troubled by how you would determine who qualifies. I have bought a large number of Apple products over the years, but not all at once. Would you set-up a threshold number of each item, or aggregate items that would throw a little love at you, like a frequent flyer program - say a free iPod shuffle or something? Or 10% off your next purchase or something like that? And how would you determine what gives the most bang for the buck perk-wise with such a diverse customer population?

Like I said, on the face of it these all are good ideas, but the devil is in the details, cost, logistics, practicality and actual value. Now if the stores weren't doing so well, these ideas would be nice perks to generate more store traffic. But I don't know that I want MORE people crowding into a store that is already packed!
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post #23 of 30
Quote:
Originally Posted by fecklesstechguy View Post

Damn popularity! Ohhh for the good old days when just a few of us were into Apple products and we could wander the Apple Stores unfettered by security and masses of other people admiring or trying out the products and getting in our way!

Amen, AppleBrother.
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post #24 of 30
Quote:
Originally Posted by stelligent View Post

Methinks Mr. Johnson is not shy about taking most of the credit for the success of Apple retail.

..you may as well own to it.

You seem to have forgotten, or are unaware of the fact that Apple retail experience was undistinguished from everyone else when they first started with the stores.

That everyone from tech pundits to retail experts predicted this would be a massive failure and was a waste of time and resources for Apple.

That now the Apple retail program figures prominently in retail marketing textbooks and the subject of scrutiny in most post graduate retail/marketing business programs as exceptional and game-changing.

That Jobs brought Ron Johnson in because Jobs believed, as he has stated before about who he brings on the management team at Apple, that Johnson not only was excellent at retail but fell in love with Apple and it's products.

False humility stinks the same way that false bravado does. Johnson earned his plaudits for doing something everyone said would fail abysmally. So yeah he probably does deserve most of the credit.
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post #25 of 30
[QUOTE=fecklesstechguy;1993106]
2. More clear layout. I guess I'm confused by this one. It really doesn't get much clearer than it is - the Accessories areas are tucked in the back two sections in most Apple Stores. Compared to most other retail operations it doesn't get much simpler than that. The only issue is looking to see which side has which accessories - I do that by walking into the middle of the back section and looking at the products offered on either side - that pretty much tells me where things are.
QUOTE]


When I think of clear layout ... I've been to the store twice where we've walked out after picking up a product. Sometimes they set up a kiosk in the centre to stay in line to pay. Sometimes in the back at the 'Genius Bar'. Nothing says "Checkout Here".

When the store is busy and there's nothing resembling a pay line and everyone busy, it's quite frustrating.

2 Cents.
post #26 of 30
Quote:
Originally Posted by trevc View Post


When the store is busy and there's nothing resembling a pay line and everyone busy, it's quite frustrating.

2 Cents.

I agree with that. I always have to ask where I should go and pay. Some lines are for genius appointments only. Some floating Apple staff can cash you out. Some can't. So yeah, a bit confusing. Nevertheless, it takes mere seconds to ask and discover. Otherwise, great retail success story. Oh, one more mild complaint - many stores are so crowded from opening to close that they stink like a hockey bag. I guess that's the smell of money
post #27 of 30
Fanboi fodder.

Walk into an Apple store, any Apple store - and ask people if they are 'there for the experience' and 'willing to pay a premium' to be there.
What a bunch of complete bullshit. People go to an Apple store so they can actually hold the gadgets and inspect the merchandise before they decide to buy - just like before... as in the entire history of the world with everything ever!!!
This article sounds like a script out Spinal Tap - its so ludacris.

Apple did a nice job designing the stores, and they provided sales people who somewhat understand the product. That's it.
It's not the Louvre or MOMA - its a retail store. If people could get an iPad for $5 cheaper down the street at Bob's Gadget Shack...
post #28 of 30

Apple used to be a boutique, but now it's a clinic. Whenever I go into the Apple Store it feels like I'm joining Heaven's Gate, or entering one of those suicide booths in Futurama. But then again that goes for most modern retail stores these days. Please Apple more pirate flag and less Ikea. That being said, I'd rather have an annoying Apple Store than no Apple Store.


Edited by connector - 4/30/12 at 10:05pm
post #29 of 30
I agree, Apple stores do creep me out a bit. Especially the glass cube, I felt like I was entering some bizarre techno-church when I went there.

I think Ron Johnson was probably bored though - I mean, most of the big problems have already been solved, and while there's certainly room for improvement as others in the thread have mentioned, I imagine that Mr. Johnson sees a bigger challenge elsewhere. In 10 years, he has the potential to do a lot more for JC Penny than he could do for Apple. I think that he was right when he said that the product is irrelevant - good products help, but I think that it's very important that the stores themselves are so distinguished and far ahead of the market.
post #30 of 30
Hmmm..I see him as a better fit for Nordstroms than JC Penny. It just strikes me as the wrong culture for his strategy to work. The only worse place I can imagine is Macys.

Lord and Taylor might have been a good fit too. I get pretty decent service there. JCP, the employees strike me as underpaid and don't care about customer service at all.

Folks DO pay extra to shop Nordstroms and L&T. I guess I can see JCP moving up a notch to the Macys level. That wouldn't be too hard. I hate that Hechts got bought out.
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