Apple thinks its stores can thrive while other retailers are dying

So much more than a place to buy Apple products.
So much more than a place to buy Apple products.
Image: Reuters/Thomas Peter
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To say that this hasn’t been a good year for retail in the US is an understatement. The US retail industry is on pace to close 8,640 stores this year—more than were shuttered during the “Great Recession” of 2008. So far, the US retail industry has shed 53,000 jobs—as many as there are in the entire coal industry.

But amidst the carnage, the biggest company in the world is doing just fine.

Apple said its retail stores “experienced strong double-digit growth in visitors and revenue” in the three months to December and is continuing to open new stores. Research firm Consumer Intelligence estimated that two-thirds of Apple’s US retail sales come from its physical locations and a third comes from its online store (paywall). Its minimum lease payments alone are currently at $8.2 billion (pdf, p.20). As of last year, they had greater sales per square foot than any other retailer in the US, including jewelers like Tiffany.

Angela Ahrendts, Apple’s head of retail, said in an interview with LinkedIn’s executive editor Daniel Roth, that the secret to success in retail is for stores to become places that people come to experience products, not just buy them.

To this end, Apple is in the midst of revamping its approach to its retail stores, which number almost 500 around the world. Ahrendts said that Apple’s retail team approached the design of the “next gen” stores as if they were a product—the hardware of the store is the physical architecture and the software of the store is the programming offered in the stores. Both are going to get an upgrade. 

The newly redesigned stores have new physical features such as a boardroom for community entrepreneurs to hold meetings. Some of the bigger ones could act as a town square for people. Ahrendts said that Apple is planning to open 100 stores of their new design concept by the end of 2017 and will replace about 30-35 of their existing stores each year.

There’s also the “software update” underway. About 400 existing stores were revamped overnight this week with extra seating and other amenities for the launch of Today at Apple, a new educational program on how to use various Apple products at the store. “Depending on what level of photography you’re into, all the way up to being a pro, they’ll demo a product for you, sign you up for one these new sessions, all the way down to teaching coding,” said Ahrendts. “That’s the Today at Apple program, the stores become a place to experience, physically, live, everything you’ve been doing on your device.”

Ahrendts added that she didn’t think malls were dead yet, but to survive other malls and other retailers also needed to focus more than shopping:

I don’t think malls are going to go away. People still need somewhere to go, but they do have to evolve. Those that have added entertainment and food and beverage—it used to be that 80-20 rule, it would be 80[%] shopping and 20[%] experience—it’s got to to go the opposite now. Because all the shopping you can do faster, cheaper, etcetera online.