The CEO of J.C. Penney and the former senior vice president for retail at Apple, Ron Johnson recently ran a guest post detailing his Apple tenure over at the Harvard Business Review blog. The post was accompanied by a large interview which appears in the December 2011 issue of the Harvard Business Review magazine.
According to Jonson, Apple’s success in retail isn’t due to its shiny products. “You don’t need to stock iPads to create an irresistible retail environment”, he said. “You have to create a store that’s more than a store to people”. Johnson says even though Apple products can be purchased for less elsewhere, people still continue to visit Apple’s stores for the experience and not only just the products. Johnson continued to argue the following:
People come to the Apple Store for the experience — and they’re willing to pay a premium for that. There are lots of components to that experience, but maybe the most important — and this is something that can translate to any retailer — is that the staff isn’t focused on selling stuff, it’s focused on building relationships and trying to make people’s lives better. That may sound hokey, but it’s true.
Their 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.
As of right now Apple Stores average $40 million annually per store. They are “the highest performing stores in the history of retailing.” Here Johnson believes that physical stores will remain the primary way people acquire merchandise for quite some time. As of right now, 9% of U.S. retail sales come from online transactions growing ten percent a year. Here he is adamant that any online store can undergo transactions but only those that enrich people’s lives and add value simply beyond providing merchandise will be successful. Here is what Johnson had to say about the whole ordeal:
For most stores, moving from a transaction mind-set—“how do we sell more stuff?”—to a value-¬creation mind-set will require a complete overhaul. The Apple Store succeeded not because we tweaked the traditional model. We re imagined everything. We completely rethought the concept of “try before you buy”: You can test-drive any product, loaded with the applications and types of content you’re actually going to use, and get someone to show you how to use it. If you buy it, we’ll set it up for you before you leave the store. If you need help after that, you can come back for personal training. If there’s a problem, you can usually get it fixed faster than a dry cleaner can launder your shirt.
Do you feel the same way when walking into an Apple Store? Share any thoughts and experiences below!
Source: Harvard Business Review (1) (2)