Angela Ahrendts can take Apple retail to the next level
Apple as a retail destination is all about the experience. Banks of desks showcase the latest products, enabling anyone to play around on an iPad, iPhone or Mac.
Apple staff are on hand not to sell (although they’ll do that too) but to help and inform shoppers. Plus the now infamous “Genius Bar” provides technical support for anyone with a broken or malfunctioning Apple product, fixing problems on the spot or providing customers with a new device.
For Apple, its retail presence isn’t an attempt to flog products but an opportunity to solve consumers’ problems, whether that is an inability to decide what product to buy or an iPhone with a cracked screen. And all of this in a shopping environment totally controlled by the brand.
Like its products, Apple stores are sleek, minimalist and well designed, aimed at luring consumers into the Apple narrative. They also work.
Since the first Apple store opened in 2001, their popularity has soared. Apple’s retail operation makes $6050 in sales per square foot in the US, the most of any American retailer, according to data from RetailSails. Overall, sales from “Apple Stores” hit $18.8bn last year and the operation, which comprises almost 410 shops and 4.1 million square feet, made a profit of $4.9bn.
Which might leave you questioning, what on earth does Apple need Angela Ahrendts for?
There’s no doubting her retail credentials. Arriving at Burberry back in 2006, she transformed the brand, distancing it from downmarket associations and focusing on new products, such as own-brand cosmetics and animal-print scarves.
She has also worked to integrate digital, quickly realising the power of the internet not just to sell, but to build and promote the brand. Its website, known as Burberry World, includes a store, as well as a social media channel where people can post photos of themselves in traditional Burberry trench coats. Plus it has introduced webcast catwalks, using the iPhone 5S to capture the entire spring/summer 2014 show.
That has paid dividends. Burberry’s revenues hit £2bn last year, with profits at £351m. Since her arrival, the market value of the company has risen from £2.1bn to more than £7bn, while its shares have increased 461 per cent, compared to a 59.5 per cent gain among the rest of the FTSE 100.
But what can she bring to Apple?
There are clear overlaps in what Apple is trying to achieve and what Ahrendts managed at Burberry.
Apple is keen to move away from its roots as a tech company and into the realms of a luxury brand. It already has the brand advocates, but now it needs to upscale. That’s something Ahrendts was hugely successful at with Burberry, where she managed to spur prosperity at a time when the brand risked dilution, particularly in the UK as cheap fakes swamped the market.
Apple now faces a similar challenge as competition in the smartphone and tablet markets moves away from expensive, high-end devices and towards cheaper, more mass market products. Apple is having to shift strategy and listen to its critics by bringing out cheaper iPhones and iPads. But it will want to make sure that doesn’t dilute its brand.
Secondly, the worlds of fashion and technology are increasingly overlapping and that will only accelerate as wearable tech such as smart watches hit the market. Apple is rumoured to be working on its own device, the iWatch. Who better to work out how to market that product in store than a luxury fashion retailer?
Lastly, Apple wants to be seen as innovative. But its retail operation increasingly is not. Rivals including Microsoft and Google are emulating Apple by launching their own stores. If it wants to stay a step ahead Apple needs to come up with new exciting in-store experiences and ways to marry the offline and online world.
When you put it like that, Ahrendts seems like the perfect match for Apple. Hopefully, unlike Dixons CEO, she will prove to be the fit Apple are looking for.