I’ve written a few times about The End Of Retail, but Ron Johnson who recently stepped down from a job running Apple’s retail division and is starting work this week as CEO of J.C. Penny obviously believes retail chains have a bright future in America. Late last year he shared his thoughts on the subject with the Harvard Business Review:
Think about this: Any store has to provide products people want to buy. That’s a given. But if Apple products were the key to the Stores’ success, how do you explain the fact that people flock to the stores to buy Apple products at full price when Wal-Mart, Best-Buy, and Target carry most of them, often discounted in various ways, and Amazon carries them all — and doesn’t charge sales tax!
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. The staff is exceptionally well trained, and they’re not on commission, so it makes no difference to them if they sell you an expensive new computer or help you make your old one run better so you’re happy with it.
One obvious difference here is that it’s not really a big deal to Apple if people spend some time availing themselves of the knowledge of Apple Store employees and then end up buying the product at a discount someplace else. You’re still increasing sales of high-margin Apple products, so it’s basically fine. The stores exist as a kind of marketing apparatus for the products. That allows them to be run with a bit of a casual indifference to whether or not customers actually buy anything that, paradoxically, makes them unusually pleasant places to shop. And in a world of online retailing, a successful store basically has to be an enjoyable shopping experience. But this strategy has elements that don’t generalize very well. If you spend an enjoyable 30 minutes browsing the shelves at Barnes & Noble and then end up buying a book that looks good on Amazon, that’s a disaster for the company in a way that it’s just not for Apple.