Learn Retail Success—the Apple Store Way
Ask a seasoned entrepreneur how to increase sales and you'll likely hear such terms as up-sell and cross-sell. In other words, they try to encourage the customer to buy more. So it might be surprising to hear that Ron Johnson, currently CEO of J.C. Penney and, more notably, the man who made Apple's retail push the phenomenal success that it is, has little regard for such techniques. What built Apple stores into the most successful retail concept in history wasn't business as usual.
In a post on the Harvard Business Review blog network, Johnson explains what he learned in building the Apple stores. With a few adjustments for different types of businesses, those lessons have a lot to teach any entrepreneur.
It's about the experience, not the price
It's easy to assume that Apple built a retail empire that outsells even high-end jewelry locations per square foot on the availability of its own products. But that's a red herring. As Johnson points out, many other big retailers offer Apple products, usually at a discount. Amazon has all of the products and often lets the consumer skip sales tax.
So why do so many flock to the Apple stores to make their purchases? It's because of the experience. Start with the design—like the products themselves, it appeals. People like to walk into the carefully considered architecture and bask in the ambiance.
More importantly, they deal with employees who are paid salaries and told to focus on "building relationships and trying to make people's lives better." Consumers can go into a store and experience what it's like when what they want seems more important than what the business wants. The staff is knowledgeable and trained, so they can actually be of help:
So the challenge for retailers isn't "how do we mimic the Apple Store" or any other store that seems like a good model. It's a very different problem, one that's conceptually similar to what Steve Jobs faced with the iPhone. He 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?" 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?"
Quite a challenge. Suddenly, nothing done before is sacrosanct.
Challenge your own operations
This transformational question isn't limited to those running retail operations. Instead, ask yourself how you can transform your business with your customer at the very center of it. Talk of customer-centric business isn't new, but it might as well be given how rarely people practice it.
Moving a company toward greatness isn't for the faint of heart. This is the potential complete restructuring of everything entrepreneurs are certain that they know. But in a way, you only let go of the details. What remains are the principles of how to treat customers and create a marvelous product or service. What you really ask is if there's a better way to achieve these ends, rather than the ones to which you and others have become accustomed.
Be willing to invest
Greatness also isn't for the impatient. When Apple first announced its plans to enter retail, many experts dismissed the possibility and even predicted an early exit for the company. The start was hardly instant success. As Johnson points out, no one went to the Genius bars for a year. That had to give everyone, from retail staff right up to Steve Jobs, pause to think. And yet, Apple kept the feature because they knew they had to work with customers face-to-face to build the sort of loyalty they wanted.
It will take time, ingenuity, effort, and dedication to remake your business into what it could become. But it's all worth it. Just ask Johnson and Apple.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.