Ron Johnson 'reimagined everything' when creating the Apple Store
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, whatÂ?s growing is physical retailersÂ? extension into a multiÂ*channel world," Johnson said. "ItÂ?s not as though thereÂ?s a physical retail world and an online retail world, and as one grows, the other declines. TheyÂ?re 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 Â? 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 thatÂ?s right for you, even if itÂ?s 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 donÂ?t know if IÂ?m a great selector, but IÂ?m 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?'"
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, whatÂ?s growing is physical retailersÂ? extension into a multiÂ*channel world," Johnson said. "ItÂ?s not as though thereÂ?s a physical retail world and an online retail world, and as one grows, the other declines. TheyÂ?re 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 Â? 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 thatÂ?s right for you, even if itÂ?s 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 donÂ?t know if IÂ?m a great selector, but IÂ?m 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?'"
Comments
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.
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.
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.
As for JCP... boy, that is going to be some work. Their stores are really a mess on many levels.
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.
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.
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.
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?)
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.
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?).
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.
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?
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.
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...
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.)
"Suspect sighted."
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.
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.
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...
Methinks Mr. Johnson is not shy about taking most of the credit for the success of Apple retail.
So what?
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.
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.